According to recent research by Which?, one homeowner in 20 could face being made homeless now that the Bank of England has increased the base rate by 0.25%.
An increase in interest rates is excellent news for savers, although for millions of homeowners, it will mean that their monthly mortgage repayments will rise. As landlords will also see their monthly mortgage costs increase, this may be passed onto tenants with higher rents.
The last rise in Bank of England interest rates was over 10 years ago, and research indicates that around eight million homeowners in the UK have never experienced a rise in interest rates.
According to Which?, 42% of current mortgage holders had been a homeowner for 10 years or below, prompting industry experts to question whether they will be prepared for an interest rate rise. The Which? Report stated that around 25% of homeowners had a variable rate, and a third of those admitted that a 0.25% rise would have a significant impact on their daily life. One in 20 would be left facing financial difficulty if the interest rates increase.
Which? is calling on lenders, banks and other companies to make sure that customers have all the information required to be able to cope with the interest rise. However, homeowners are being advised to be proactive and approach a mortgage advisor, whose CeMAP training will provide the necessary knowledge to be able to offer guidance, possibly advising those on variable rates to secure a fixed rate deal.
