moneysupermarket.com found that a Base Rate rise of just 0.5% would mean a £44 per month jump in mortgage payments for homeowners with a £150,000 variable repayment mortgage on an average 4.74 per cent SVR. If the Base Rate rises by 1%, their monthly repayments would leap up by £88, representing a huge hit to their finances.
Such rises could have wide reaching consequences for many struggling UK homeowners and a staggering 17% of borrowers surveyed admitted they won't be able to afford their mortgage when rates do rise, while 6% have already put their houses on the market.
Commenting, Kevin Mountford, head of banking at moneysupermarket.com said: "Reducing the Base Rate at a time when the country was at the beginning of the credit crisis was the right thing to do at the time as it freed up vital money to help stimulate the economy. Many consumers have taken full advantage of the fall in mortgage payments and have absorbed these savings into every day living costs. However, the danger is, when rates rise, which they will do sooner rather than later, many people will find they don't have the spare cash to fund the increases in their monthly payments.
"Borrowers need to be aware that a rise of even 0.5% will have a big impact on monthly expenditure, especially with family finances being stretched to breaking point.”
