Two thirds of consumers (63%) expect interest rates to rise in 2015, however despite these concerns only a third (35%) of people have prepared accordingly.
Additionally, a £100–£199 rise in repayments would mean 35% of homeowners would struggle to make their repayments.
The problem is particularly acute for older borrowers, with almost half (48%) of 55 to 64 year olds and more than half of those over 65 (54%) saying they would struggle with their repayments if they rose by up to £200.
Over a third of borrowers (35%) say they have already prepared their finances for a rate rise. However nearly one in four (23%) consumers said they would wait until the first base rate increase is announced to review their finances and another 20% will wait for the base rate to reach 1% before they act. Over a quarter of respondents (27%) said that speaking to a broker would be the biggest catalyst to encourage them to review their finances.
Jeremy Duncombe, Director at Legal & General Mortgage Club said:
“Our latest Mortgage Mood data suggests that many borrowers are not ready for an interest rate rise. The last time rates went up in the UK was in 2007 and although the base rate has been static at 0.5% for over five years, they will rise sooner rather than later. Waiting for rates to rise before you act might seem like a good idea to some but in reality the best deals won’t be available once rates have risen as lenders price in a rate increase well in advance.
“Perhaps the most encouraging aspect of the survey was that a quarter of people would be more likely to review their finances if they spoke to a broker. Talking these issues over with a broker is a great way to get advice about how to minimise the impact of an interest rate rise on your household.”
