Mortgages  

‘Big mortgage homeowners most at risk’

The outgoing deputy governor of the Bank of England told economists at the beginning of July that if interest rates were to rise by just 1 per cent then highly-mortgaged homeowners were at most risk.

His comments came as the economy began to show signs of recovery with an increase from 0.4 per cent to 0.5 per cent in the gross domestic product growth rate during the second quarter. Although there was no rise in the bank base rate in July, Mr Tucker’s comments suggested that a rise might be on the cards.

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Ian McGrail, managing director of London-based First Mortgage, said: “A rise in interest rates would undoubtedly be a concern for homeowners.

“Having had low interest rates for the past few years, many borrowers have adjusted to significantly reduced mortgage payments, therefore increasing their disposable income. Any rise in interest rates would cause borrowers to review spending habits or even consider working more in order to afford their increased mortgage payments.”

He added that borrowers on tracker-rate mortgages were “most at risk” from an immediate increase in mortgage payments.

Statistic: 0.5% - UK GDP