Homeowners unprepared for interest rate rises
Monday, 21 February 2011 12:49 PM
Concern is growing for the thousands of UK mortgage customers who have failed to prepare for interest rate rises, after the Bank of England governor warned that there could be three separate increases this year.
Mervyn King's announcement came off the back of last week's record inflation announcement, with the Consumer Prices Index rising from 3.7 per cent to four per cent in December.
New research from Nationwide has shown that 75 per cent of homeowners have made no plans for how they would cope in the event of an increase in base rate – which would result in higher mortgage repayments for many.
Martyn Dyson, mortgage specialist at the building society, said that although home loan payments are not as "exciting" as spending money on new cars or TVs, they are "fundamental" to living and a "huge commitment".
"There is a real opportunity for people to start planning their mortgage now and maybe even save some money, which would put them in a better position for when the base rate does start to increase," he added.
The Nationwide study found that even when rates are increased, only one in six homeowners would immediately attempt to improve their existing deal.
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