More than a quarter of mortgage borrowers at risk if rates rise
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Your support makes all the difference.More than a quarter of mortgage borrowers will face financial trouble when interest rates rise. That’s according to a new study published today.
The research from the Building Societies Association and the Money Advice Trust sends warning to borrowers that they should be starting to prepare for a rise in interest rates.
While we don’t know when it will happen - although many experts expect it to be soon after next year’s General Election - it seems inevitable now and those that don’t prepare could face difficulties in the future.
“After all these years, mortgage-payers are in for a big financial shock when interest rates begin to rise,” warned Joanna Elson of the Money Advice Trust. “For many, that shock will be too much to absorb – and there is a real risk that we will see a surge in unmanageable debt problems as a result.”
Mark Carney, the Governor of the Bank of England, has indicated that the Bank Rate will rise gradually from its current 0.5 per cent to a more long-term normal rate of 3 per cent.
Borrowers need to work out how much monthly mortgage costs could rise, and plan accordingly.
“Our advice to those concerned about interest rate rises is to start thinking about how they will manage the increased costs,” said Paul Broadhead of the Building Societies Association.
“This could include creating a household budget, to taking a look at mortgage calculators and rescheduling unsecured loans such as credit cards.”
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