Borrowers brace themselves for rate rises

10/02/2009

Worried homeowners are expecting increases to interest rates over the next few months - potentially making their mortgages more expensive to pay off.

According to a consumer poll from Lloyds TSB, released today, 24 per cent more people believe that rates will go up next year, rather than go down.

In December, this balance of opinion stood at just 20 per cent.

Over recent months, the Bank of England has embarked on an aggressive rate-cutting strategy as it struggles to boost the economy.
These cuts have been reflected in the rates offered by many mortgage products.

The Bank rate currently stands at just one per cent - an all time low - having been at over five per cent a year ago.

Commenting on the new report, EuroDebt director Kevin Still said: "It is always prudent for consumers to plan for rate rises and for those in debt and on repayment plans not to over promise on what they think they can repay, as unexpected expenditure increases are difficult to deal with if your budget is too lean.

"One of the reasons EuroDebt undertakes at least one thorough annual review of its clients circumstances is to determine whether on balance there has been a material rise or fall in disposable income made up of a number of major items in a client's household income and expenditure. Whilst mortgage payments may be lower now than they were a year ago, it is likely that take home pay is lower and that house keeping, council tax, critical insurances and utility bill are higher."

Tags; Housing Debt and Bills, Young Family Finances,

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