Business

Fears for mortgage rate awareness

Image caption Mortgage rates have been at relatively low levels

Three-quarters of mortgage-holders do not know how an increase in interest rates of one percentage point would affect their budget, a survey says.

Some do not know what type of mortgage they have or when it expires, the poll found.

The survey of 2,262 people was conducted for an education group, the Consumer Financial Education Body.

The Bank rate has been kept at 0.5% for 15 months in a row, with the latest decision to be announced on Thursday.

Poll

Key findings of the survey included:

  • Some 51% of those asked believe interest rates will change in the next nine months
  • One in seven (15%) do not know whether they are paying a fixed, standard variable, tracker or discounted rate
  • Some 8.6 million people, out of 14.6 million people in the UK who have a mortgage, have a time-limited deal
  • One in seven (15%) of these people do not know when their deal expires

To assist them, the group has updated its mortgage guides on the Moneymadeclear website.

Tips include checking "key facts" paperwork provided by a lender when the mortgage was taken out. This shows when the deal comes to an end.

"Interest rates have been at record lows for some while now," said Tony Hobman, chief executive of the group.

"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.

"Lack of time means many of us often put off reviewing our finances."

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