When the Bank of England (BoE) will hike interest rates has been a hot topic for months, leaving many to guess when they will pull the trigger. It`s also become a sore spot for homeowners, with more than half worried about falling behind with mortgage repayments.
This is according to a new report from the Building Societies Association, which also revealed that one tenth of Brits with a mortgage will experience financial problems once interest rates are increased.
More than one in ten said they would be able to make their payments on time, but it would be a struggle, while one quarter claimed it would make them experience financial difficulty from time to time.
When questioned about how bigger repayments would impact their lifestyle, 18% said they would be forced to cut back on essentials, such as food or clothing, to ensure they had money to pay the mortgage.
An additional 15% said they would need to work more hours to keep on top of their loan repayments.
Commenting on the results, Paul Broadhead, head of mortgage policy at the Building Societies Association, said that these worries are normal, as there are around 1.85 million homeowners that have yet to experience a rates rise, as costs have been at a record low.
He said: `Our advice to those concerned about interest rate rises is to start thinking about how they will manage the increased costs.`
This could include creating a household budget, using mortgage calculators to see if there is a better deal out there and rescheduling unsecured loans such as credit cards. Mr Broadhead added that there is plenty of free advice available to those who are concerned about how they can afford their mortgage repayments once interest rates rise.
There was some good news in the report, he added, as almost one quarter of borrowers said they wouldn`t need to make any changes to their lifestyle when the interest rates are increased.
Mr Broadhead noted that based on the latest vote by the Bank of England`s Monetary Policy Committee eight in favour of no change versus one for raising rates it is unlikely that anything will happen until we are well into 2016.
Joanna Elson OBE, chief executive of the Money Advice Trust, explained that while the hike will come as a shock to borrowers, it presents them with an opportunity to reassess household budgets and look into deals from alternative providers.
`It is crucial they take advantage of this and prepare themselves now` she added.
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