62% not fazed by prospect of rate rise
Two thirds of British households could cope with an increase in the cost of their mortgage, according to research.
A study commissioned by Loan.co.uk, asking borrowers how a rise in their mortgage rate would impact on their household finances, revealed that 62% think such a rise would hurt their budgets a little or not at all.
Twenty-two per cent of respondents said that a 0.5% rise or more would not affect their monthly budget at all, and 40% believe it would impact just a little.
Over 20% believe that if the Bank of England were to increase the Base Rate for the first time in six years it would squeeze their finances ‘quite a lot’, while 7% said such a rise would have a ‘significant impact’.
The survey of 2,000 people also found that 65% of people expect the Base Rate to rise by at least 0.25% in the next 12 months in line with economist’s expectations.
A fifth (20%) expected a rise of 0.25 per cent while 45% thought it would jump by 0.5% or more. A further 20% of respondents admitted to having no idea.
Paul McGerrigan, chief executive of Loan.co.uk, said: “The Bank of England has told us that when rates eventually do rise, they will do so gradually, which is encouraging.
“If we do see the first rate rise in the next 12 months in line with economic forecasts, it won’t be large and borrowing rates, whether it be for a mortgage or a secured loan, will remain low.”
He added: “The results of the survey show that households recognise that although the base rate can’t stay at 0.5 per cent forever, it appears it won’t rise sharply as in the past.
“This, combined with an increase in disposable income as a result of falling oil prices and the knock on reduction of shop prices, means consumer confidence appears to be higher than it has been for several years.”