Almost a third of homeowners do not know what impact a rise in interest rates will have on their monthly mortgage repayments, according to research commissioned by Callcredit Information Group.
The research, undertaken by YouGov, looked at how people perceived a possible interest rate rise might affect their finances.
For those borrowers within the higher band of mortgage repayments, £1,000 – £1,500 per calendar month, 13 per cent have little awareness of exactly how much disposable income they have each month and as such are leaving themselves vulnerable to the impact an interest rate increase might have on their financial circumstances.
Jacqueline Dewey, managing director, consumer markets at Callcredit, commented: “With interest rate rises expected in the coming months it’s very worrying to see such a large number of people who do not have a full understanding of their finances.
“When asked the question ‘what are your monthly mortgage repayments?’ some respondents didn’t even know. This, combined with 61 per cent confirming they never check their credit report, highlights the need for consumers to get a grasp on their finances and understand how any rate rises might impact them.”
For the first quarter of 2014, one in 400 mortgages had arrears equivalent to 10 per cent or more of the mortgage balance.
Dewey concluded: “Since the financial crisis, borrowers have benefitted from low interest rates, which have allowed households to meet their repayments despite the rise in cost of living. It’s not a case of “if” but “when” interest rates will rise and therefore it’s vital for borrowers to plan for how they will cope with a change in their circumstances.
“Checking your credit report regularly is a good place to start as this contains details of most of your financial commitments, allowing you to view exactly what your monthly out-goings are.”
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