MortgagesSep 15 2014

Homeowners unaware of rate rise impact on disposable income

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Homeowners have little understanding of the effect that an interest rate rise could have on them, a YouGov poll has found.

Some 13 per cent of respondents who were within the higher band of mortgage repayments, between £1.000 and £1.500 a month, had little awareness of how much disposable income they had.

The YouGov survey, of 2,010 people, found that people were unaware that interest rate rises could erode the value of their disposable income.

Meanwhile, the poll also revealed that 61 per cent of respondents have never checked their credit report.

A poor credit score can have a detrimental effect on people’s ability to apply for new mortgages and could become a barrier to prospective first-time buyers.

Jacqueline Dewey, consumer markets managing director for Callcredit Information Group, which commissioned the survey, said: “With interest rate rises expected in the coming months, it’s very worrying to see such a large number of people who do not have a full understanding of their finances.”

Adviser view

Ashley France, mortgage adviser for Ark Financial Planning, said: “Some people will not understand the effect of interest rates, especially when they are already living within their budgets.”