Borrowers are worried about the effect a rise in interest rates will have on their regular debt repayments, according to research published by the Building Societies Association (BSA).
The survey of 2,000 adults shows that around a tenth think that a rise in interest rates would mean that they experience financial problems.
The other findings of the survey:
- 52% of respondents say they will struggle or fall behind with their mortgage payments
- 14% think they could keep up with repayments but it would be an ongoing challenge
- 23% say they would experience difficulty from time to time
- 18% think they will have to cut back on essentials like food and clothing in order to meet their regular repayments
- 15% would have to work more hours
- 22% do not think they will have to make significant changes.
Paul Broadhead, head of mortgage policy at the BSA, said:
“Concern from borrowers is natural when it comes to interest rate rises. There are at least 1.85 million homeowners that have never experienced a rate rise, we have a record low bank base rate for so long, it is unsurprising that some people are concerned that a rise in rates will affect their lifestyles and ability to make mortgage repayments.
“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, to taking a look at mortgage calculators and rescheduling unsecured loans such as credit cards.”
Joanna Elson OBE, chief executive of the Money Advice Trust, which runs the National Debtline, said:
“Households now have a window of opportunity to re-assess their budgets, look again at their borrowing and think about how they will cope with higher interest rates. It is crucial they take advantage if this and prepare themselves now.”