The firm undertook a survey of 2,000 people asking how much monthly mortgage payments would need to rise this year in order to put finances under pressure - and 10% of respondents said up to £50 would be enough. This means that, if the Bank of England rate reaches 1.5%, it could mean more than a third of people with variable-rate mortgages face difficulties by the end of the year.
Meanwhile, with 1.5 million fixed-rate mortgages set to expire this year, more than a third could face financial stress if the base rate hits 1.5%.
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown:
“The rate rise may have looked relatively harmless, but with so many people’s finances on a knife edge, it risks pushing them into difficulties.
"Once increases started closing in on £100 a month, a third of people said they’d face difficulties, and with a rise of up to £200 a month, two thirds said they’d struggle. Unfortunately, rises of this size are possible."
"Three quarters of mortgage holders have protected themselves by opting for a fixed-rate mortgage. And while they’ll be reaping the benefits during the fixed period, it means they’ll feel the impact in one harsh blow when their mortgage expires."
"Someone remortgaging at the end of a two-year fix could see their monthly payment increase by £61, causing financial stress for more than one in ten. If they locked into a new deal after another 0.25 percentage point rise it could push their payments up £97, and if rates rose yet another 0.25 percentage points, it could add £134 to the bill – when more than one in three people could struggle to afford the extra costs."
"These hikes may have been more manageable before we were hit with eye-watering inflation, but while we face soaring bills on all sides, for some people, higher mortgage payments will feel like the straw that broke the camel's back."
