The Treasury Department has directed mortgage servicers to notify borrowers 120 days in advance of upcoming increases in monthly payments on loans previously reworked through the Home Affordable Modification Program.

Some borrowers' monthly bills could rise by as much as $1,700, although the increases will be gradual and the national median increase will total around $200, the department says. Treasury officials want to ensure borrowers have plenty of advance notice of a reset and counseling will be available if necessary.

"Treasury will maintain its oversight of participating servicers," Mark McArdle, the chief of Treasury’s Homeownership Preservation Office, said in a March 12 note to servicers. "We will monitor the interest rate resets to ensure that if signs of homeowner distress arise, servicers are ready and able to help by providing loss mitigation options and alternatives to foreclosures."

Many distressed homeowners saw their interest rates reduced to 2% and the median monthly payment cut to $773 under the HAMP program, which was launched in 2009.

There are currently 782,748 HAMP active mods that are slated to complete a multiyear reset process by 2021.

An estimated 30,126 HAMP mods will start to reset this year and the interest rate will go up one percentage point per year until it adjusts to the rate agreed upon at modification. The reset rates will range from 4% to 5.4%, according to aTARP Inspector General report. That is lower than 6.4% median interest rate that the borrowers had before the modification.

The multiyear median monthly payment increase will be $196 when the HAMP reset process is complete. However, the maximum payment increase could be $1,724 in places like California, compared to $789 in Arkansas.

Ten states and the District of Columbia will "face mortgage payment increases that are more than the $196 national median," the inspector general's report says

Economists expect the Bank Rate to rise in early to mid 2015 – but economists’ predictions have consistently missed the mark.

Mark Carney, governor of the Bank of England, has indicated repeatedly that interest rates will not rise until people and businesses begin to share in the economic recovery. This has not helped bring clarity, either.

But there are signs that banks are already starting to price a rate rise into their deals, particularly fixed-rate mortgages. There are two main reasons for this. Firstly, cheap loans through the Government's Funding for Lending scheme (FLS) can no longer be used for mortgages. Secondly, the pricing of fixed rate mortgages is influenced by markets that reflect future interest rates, and today they price in a greater chance of rate rises than they did a few months ago.

Five-year fixed rate mortgages have edged up from their record lows of 2.44pc in July 2013, to just under 3pc now.

Savings rates are also slowly edging higher, although so far by disappointingly little. Savers have a long way to go before rates return to pre-crisis levels.

Capital Economics believe rates will remain fixed at 0.5pc for at least a year. It is a forecaster worth listening to: most economists took years to grasp that the era of low rates was with us, repeatedly since 2009 predicting "rates to rise next year", but Capital Economics was far more dovish than the rest.

Samuel Tombs, Capital's UK economist, said: "The MPC’s decision to leave interest rates on hold, marking five years since they reached their record low, is likely to be repeated many more times. With recent news suggesting the MPC’s estimate of spare capacity is too conservative, we think the sixth anniversary of 0.5pc rates will be marked next year.

"While we do not like to blow our own trumpet too often, forgive us for recalling that we argued in 2009 interest rates could stay at 0.5pc for as long as five years in response to prolonged fiscal tightening, weak bank lending and a sluggish recovery. Indeed, we are one of the very few forecasters that never predicted a rate rise in this period. For instance, at the start of 2010 we were one of only two forecasters predicting that rates would still be at 0.5pc at the end of 2011."

He says divisions are emerging on the Monetary Policy Committee with Martin Weale, a member, wondering whether pay growth may return meaning the need for a rate rise in the next year. But Mr Tombs says the recent rise in unemployment and the fall in inflation to 1.9pc are meaningful ammo for rate doves.

He concluded: "The case for thinking that the recovery can continue for some time without prompting inflationary pressures to build has been strengthened by recent news. As a result, we continue to think that the MPC will be able to leave interest rates on hold until late next year."