According to research from TSB, many British home owners are not prepared for a rise in interest rates.
The TSB report revealed that almost three quarters of homeowners are likely to see their mortgage payments increase if the base rate changes.
The Bank of England’s Monetary Policy Committee will meet on the 10th December to decide if the base rate should increase for the last time this year.
For nearly seven years the Bank of England base rate has stayed at 0.5 per cent. In the meantime there have been more than two million new homeowners in Britain.
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.”
However, TSB’s study found that one in five homeowners have ‘no idea’ how a rate rise would affect them.
Andy McBride, Business Development Director at Mortgages Made Easy, said “Although these figures are worrying, much can be done in to pre-empt and accommodate any future changes in rates. A good tip to be prepared for a change in rates is to understand your current mortgage as it’s important to understand the terms of your mortgage before you make any changes.”
You can contact your existing lender and even ask for a ‘redemption statement’ to find out the terms and any early repayment charges.
TSB’s research also looked at how people would react to a base rate increase and found that just under three quarters said they would budget and make spending cutbacks. 43 per cent said they would try to switch to a cheaper mortgage, while 33 per cent would prioritise debt repayments.
TSB spoke to 2,000 UK adults with mortgages during September 2015.
Article By: Bradley George, Senior Mortgage Consultant at Contractor Mortgages Made Easy
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