A top bank boss has warned of “headwinds ahead of us” as rising interest rates push more mortgage customers towards financial distress.

Head of HSBC UK Ian Stuart and counterparts at his main UK rivals told a committee of MPs that while there was no or little evidence yet of customer defaults, the pressure would intensify this year as higher rates combined with the wider cost of living crisis.

The Bank of England had warned last year of an extra £3,000 annual bill for around four million households at a time when energy-led inflation was at a 41-year high.

Much of that sum can be explained by the Bank’s own efforts to curb inflation through consecutive rises in Bank rate, which have hit new mortgage customers and those on tracker and standard variable rates.

It also reflects the fallout from the now-defunct Truss-era mini budget last September that spooked financial markets.

In his evidence to the Treasury select committee, Mr Stuart said: “I just want to put a health warning out there. I think the headwinds are ahead of us, not behind us.

“We’ve got 222,000 customers this year who will change their mortgage. The vast majority of those customers are going to see some increase in pricing so we are working very hard to get the very best product price into the market.”

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He said that tracker mortgages – those that track Bank rate – were surging in popularity for the first time in years as customers increasingly backed hopes that it was nearing its peak and would soon fall.

The Bank itself, just last week as it raised the rate to 4% from 3.5%, hinted that the time was close for the hikes to stop.

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Mr Stuart added that fixed rate deals remained the most popular product.

They have been settling down since the chaos of the mini-budget that saw many lenders temporarily withdraw products so they could be repriced.

Recent reductions in swap rates, which lenders use to price mortgages, have seen rates below 4% start to become available again but with fees and other conditions attached.

HSBC launched, earlier on Tuesday, a 3.99% five year fixed rate but it was only available to those remortgaging.

Bank bosses, also encompassing Lloyds boss Charlie Nunn, NatWest CEO Alison Rose and Barclays UK chief Matt Hammerstein were taken to task on the age-old issue of low savings rates – particularly in the area of instant access accounts.

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They denied there was a link to Bank rate and insisted the rates were rising and were competitive.

Mr Stuart described instant access as a “gateway” to saving – insisting there were better rates on offer in other savings products – comments that were echoed by his rivals.

Responding to questions on instant access, Mr Hammerstein added: “I definitely refute the idea that we rely on inertia, I don’t think that’s in any way representative of the way we design products or the way we engage customers.”

He said customer feedback to Barclays suggested customers had lost their savings habits, and the bank had designed its product range to support them.

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