Thousands Unaware of Mortgage Rate Implications
A recent survey has highlighted that many homeowners have little or no understanding of the impact that a 1 per cent increase in mortgage rates would have on their finances. The study found that three quarters of mortgage holders did not know how an increase would affect them, and many were unable to say what mortgage product they held or even when the term expired.
The Consumer Financial Education Body, an education group, carried out the survey on 2,262 people. The Bank of England, which sets the base rate that determines the rate on standard variable products, has held interest rates at just 0.5 per cent for 15 consecutive months.
The most prominent findings from the survey included:
- Over 50 per cent are expecting interest rates to increase in the next nine months.
- Out of the 14.8 million mortgage holders in the UK, 8.6 million of them have a time limited deal, for example a fixed rate deal.
- 15 per cent, or one in seven people, were unable to confirm if they held a standard variable rate, tracker, fixed or discounted rate.
In response to the confusion, the group updated its mortgage guides, which can be found on the Moneymadeclear website. Tony Hobman, chief executive of the group, told BBC News: "Interest rates have been at record lows for some while now."
He added: "Although there is uncertainty about when this will change, it is clear from our research that many people with mortgages have not 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."
Mortgages news posted by Don on 09 July 2010
