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An increase of 2 percentage points interest rates could push the cost of a ?150, 000 mortgage interest only ?250 per month photo: GETTY

With mortgage rates set to follow, this could have disastrous consequences for 7 m homeowners who currently have variable rate mortgages.

According to the Council of mortgage lenders (CML), houses approximately 2.9 m owners have mortgages that are no longer considered "affordable" in accordance with the guidelines set out by the city watchdog, the Financial Services Authority.

Although increases in more modest rate (between 1 and 2 percentage points), about 1.6 m mortgage would be deemed "expensive" in accordance with the guidelines of the FSA.

An increase of 2 percentage points interest rates could push the cost of a mortgage interest only ￡ 150,000 by ￡ 250 per month.

The usual advice for those concerned about increases in rates is to pass a fixed rate agreement where the mortgage payment is guaranteed not pass for a specified period - usually two or five years. But with prices real estate sliding downwards, some owners will find difficult to secure of these transactions, because they are not enough equity in their homes.

The cheapest fixed rate agreements are currently available only to those who have at least the 40pc in their home equity. Those who have less 10pc equity are unlikely to remortgage to all the.

According to the CMA, mortgage half million were granted to homeowners with less than a deposition of 10pc since the beginning of 2007. Given that prices have declined since then, it is likely that many more owners now have less 10pc of equity in their home, so will struggle to remortgage.

It is feared that a storm of higher rates of interest, widespread in the public sector job cuts and house prices could lead to an increase of possession next year, as some families are unable to meet mortgage repayments but unable to remortgage or downsize to erase their debts.

Mark Harris, Director of Savills, mortgage broker, said owners should reassess the mortgage options. "It is now much more choice and better value on the mortgage market, particularly for those wishing to obtain an agreement for five years," he said. "Those waiting may find that they have less options a few months on the line. Not only the price of fixed rate pourrait traffic rising, but if you have less equity in your House to fall in price you may not be able to obtain the most competitive rates. ?

Melanie well, a soldier, finance broker, Director said: "even if no one knows with certainty when interest rates rise, the reality is that it will take place at one time so a wise borrower should be prepared." Examine your own circumstances: if rates rise, could allow you mortgage? If not, then you should consider a fixed rate. It is unlikely to get any cheaper; Indeed, like a rate increase seems more likely fixes will become more expensive.

"If you enjoy a good market SVR [standard variable rate] you can always reserve a fixed rate to move on the future". Some lenders will allow you to book a rate for up to six months before you commit actually there.

"If you have a high LTV loan [value], it is therefore difficult to remortgaging, talk to your lender. Many have special arrangements available for existing customers. "These, she says, cannot be as competitive as the current"best buys"but will at least provide peace of mind that monthly payments will be corrected.

A spokesman for the CMA said affordability the FSA tests were "a theoretical test" and many people who breach these guidelines in practice still would be able to repay their mortgage.

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