A new survey from TSB has found that UK homeowners are not ready for an interest rate rise, despite nearly three quarters of borrowers likely to see their mortgage payments increase if the base rate changes.
According to the report, which polled 2,000 UK mortgage owners, one out of every five homeowners has “no idea” that even a small change could have an impact on their monthly mortgage repayments.
This is worrying news for more than half of the home-owning population (56%) who say they are already struggling with household bills, while a quarter (26%) would have real difficulty if their monthly mortgage repayment increased by £99.
TSB’s research also looked at how people would react to a base rate rise and found that three out of four would budget and make spending cutbacks to meet any increased monthly mortgage repayments.
Ian Ramsden, director of mortgages at TSB, said: “The statistics included in TSB’s report are fairly shocking and clearly there’s a lot of work to be done to help Britain’s homeowners understand how they can accommodate a rate rise. But there is no need to panic; a little bit of planning now can make a big difference in the future.”
The Bank of England base rate has been at 0.5% for almost seven years, and during this time the number of homeowners has increased by 2 million.
The Bank of England’s Monetary Policy Committee will meet tomorrow for the final time this year to decide if the base rate should increase.
Low inflation and an uncertain global outlook have prompted the BoE to reconsider raising interest rates which have been stuck at 0.5% since 2009.
Following the BoEs inflation report last month, most economists believe that there is unlikely to be an interest rate rise until the middle of next year at least.
For borrowers worried about a rise in the base rate, TSB recommends they speak to their lender early, draw up a monthly budget and get any existing debt under control. People can also search for the hashtag #ReadyForRateRise for more support in the coming months.
