13% would "quickly" get into debt following rate rise

Almost 7 million people would struggle to cover their mortgage payments if interests rates rise by just 1%, according to research by Ocean Finance.

Related topics:  Finance News
Rozi Jones
3rd June 2015
couple debt worry forms

A 1% rise would see SVR borrowers pay an additional £55 a month for every £100,000 owed. Economists predict that interest rates will start to climb from Spring 2016.

Once rates do begin to rise, 63% of borrowers said they would have to cut back on all non-essential spending, while a further 13% are concerned they would quickly get into financial difficulty.

Around 10% of homeowners said they would consider selling their home to avoid higher mortgage costs.

Almost a quarter of borrowers have already switched to fixed-rate mortgages and a further 16% plan to take fixed-rate mortgages. However, over a third of homeowners are not taking any steps to protect themselves against a rate increase.

Gareth Shilton from Ocean Finance said:

“It’s inevitable that interest rates will rise at some point, whether that happens in Spring next year or later in the year. Whilst the rate rise is likely to be gradual and it may take a while to get to a 1% increase, every rate hike will have an impact on hard working families who are already struggling to make ends meet.

"Many people will feel like mortgage prisoners because their circumstances have changed since they took out their loan and they’ll understandably be concerned about what a potential interest rate rise means for them.

"It’s important to understand that in most cases there are options, so it’s important that anyone who is concerned about a rate increase should seek advice on the best deal available to them.”

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