Almost a fifth of British mortgage holders say they would “really struggle” with any increase in interest rates, according to a survey released on Thursday by a public body.
Most economists expect the Bank of England to start to raise interest rates early next year as Britain’s economy continues to grow rapidly, but the BoE has said that high household debt is a major reason why it is likely to proceed cautiously. The Money Advice Service, a public body set up in 2011 to provide free financial advice, said that 19 percent of mortgage holders said they would “really struggle to find the extra money” to cover any increase in repayments.
This proportion increased to 47 percent if mortgage payments were to rise by 150 pounds ($240) a month – roughly equivalent to an interest rate rise of 2 percentage points on a 150,000 pound mortgage with a term of 20 years. “Mortgage holders need to be more mindful of the fact that a rise in interest rates is widely predicted – even for those on a fixed rate, as their deal will come to an end sooner or later,” said Nick Hill of the Money Advice Service.
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