3.5m unaware base rate increase will affect mortgage payments

3.5 million homeowners unaware of how a future increase to the base rate will affect their monthly mortgage payments, say unbiased.co.uk.

Related topics:  Mortgages
Millie Dyson
11th April 2011
Mortgages
Despite the Bank of England base rate remaining at 0.5% again this month, there is increasing speculation over when it will rise and worrying new research from unbiased.co.uk, the professional advice website, shows 22% of all homeowners are completely unaware of the effect this increase will have on their personal monthly mortgage repayments.

Worryingly, 16% of those on their lender's SVR mortgage have no idea what effect an increase would have on their finances. A further 16% think their monthly payments would increase, but not necessarily by as much as the base rate increase.

One in ten (13%) homeowners on a tracker rate are unsure how an increase to the base rate will affect their mortgage, and almost one in five (18%) believe their monthly payments will increase, but again not necessarily by as much as the base rate increase.

Even those on a fixed rate mortgage aren't as confident in their mortgage knowledge as they should be, as 20% state they are unsure what effect an increase to the base rate would have on their personal monthly mortgage repayments.

A worrying 28% of homeowners with a fixed rate mortgage believe their monthly payments will increase at some point once the base rate rises, and of these one in twenty (5%) wrongly think they will experience an automatic increase once the base rate increases.

Karen Barrett, Chief Executive of unbiased.co.uk comments:

"Predictions of when the base rate will increase are drawing ever closer, but when it happens it will still come as a surprise to many homeowners.  The base rate increase is inevitable and so when this happens homeowners need to ensure they are prepared for what this increase will mean for their personal finances.

"Those on tracker rates, standard variable rates and even fixed rates are in the dark about how their personal finances will be affected by this change, meaning it's impossible for them to budget for the future.

"It's vital for homeowners to regularly review their mortgage arrangements to ensure that they are on the best deal for them.  Homeowners should seek whole of market mortgage advice to understand what deal they are currently on and when it's the best time for them to move onto a new deal.

"A whole of market mortgage adviser can seek products from the whole of the market place and give an exact explanation of what that particular mortgage rates mean and how they will be affected by movements in the base rate.

"Consumers can carry out a free and confidential search to find a whole of market mortgage adviser near them at unbiased.co.uk."
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