Homeowners unaware over rate rises
16/07/2010
A survey has revealed that three in every four homeowners are unsure of what impact an interest rate hike would have on their finances.
According to the newly formed Consumer Financial Education Body (CFEB), around 74% of people with a mortgage confessed they did not know how a 1% increase in the Bank of England base rate would hit their monthly outgoings.
And more worryingly, 15% are unsure whether they have a fixed rate deal - meaning they would not be affected by an interest rate rise, or whether it is a variable rate one, meaning their monthly payments would rise.
A further 15% also do not know when their current mortgage deal comes to an end.
The lack of awareness comes in spite of the fact that 51% of people with a mortgage expect interest rates to rise during the coming nine months.
More than half of people said they did not plan to review their mortgage, or would wait until just before their existing deal expired, while 14% admitted they did not know what they would cut back on if their mortgage repayments increased by £200 a month.
Tony Hobman, chief executive of the Consumer Financial Education Body, said: "It is clear from our research that many people with mortgages haven't thought about what it would mean for their monthly payments, or where they would find the extra money in their household budget if their mortgage rate was to go up."
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