As UK Economists predict that mortgage interest rates may reach 5% by the end of the year, UK homeowners are expecting the worst from the Bank of England's MPC meeting on 10 June.

Direct Line's monthly mortgage interest rate index examines the views of both UK homeowners and industry experts (personal finance journalists) on what they think will happen to interest rates.

This month, more UK homeowners than ever before expect rates to go up, while the number of personal finance journalists predicting a rate increase has fallen. And although more UK homeowners will be concerned if their mortgage payments go up, they are less likely to do anything about it this month.

RBS Group Chief Economist, Jeremy Peat commented: "It is extremely difficult to predict the outcome of June's Monetary Policy Committee meeting. There is a distinct possibility that they will raise interest rates by a further 0.25%, but at the same time, a decision to leave rates on hold at 4.25% this month would not come as a big surprise.”

“But whatever happens this time around, the overwhelming probability is that interest rates are set to rise further during the course of this year - heading to 4.75% or 5% by year-end."

Paul Hemingway, Mortgage Manager at Direct Line Financial Services said: "Homeowners are saying they are getting more worried about surging interest rates, but are not doing anything about it. A fixed rate mortgage could offer them a rock in the storm."

The key findings of the Direct Line monthly mortgage rate index showed:

• The number of UK homeowners that think rates will go up this month has jumped up to 77% (from 67% last month). However, the number of personal finance journalists that think rates will increase this month has actually dropped to 67% (from 78% last month).
• 35% of UK homeowners think that rates will go up by as much as 0.50% or more this month, while 24% think the increase will be 0.25%. None of the personal finance journalists expect rates to increase beyond 0.25% (67%) with the remaining 33% expecting rates to stay the same this month.
• A growing number of UK homeowners are worried about even a small increase in their mortgage payments this month - 15% would be concerned if they had a £25 increase in their mortgage payments (up from 12% last month). However, as their concern grows, so too, surprisingly, does their apathy, as 44% don't plan to do anything about it (as opposed to 37% last month).
• For those considering moving their mortgage, fixed rate deals are by far the most popular option with UK homeowners and personal finance journalists alike, as opposed to variable or capped rate deals.