MortgagesDec 9 2015

British homeowners unprepared for rate rise: TSB

Search supported by
British homeowners unprepared for rate rise: TSB

Many British homeowners are unprepared for a rate increase, according to research from TSB.

Nearly three quarters of homeowners are likely to see their mortgage payments increase if the base rate changes, the TSB report revealed.

However, the study found that 20 per cent of homeowners have ‘no idea’ how a rate rise would affect them.

Tomorrow (10 December), the Bank of England’s Monetary Policy Committee will meet for the final time this year to decide if the base rate should increase.

The Bank of England base rate hasn’t budged from 0.5 per cent for almost seven years, and during that time, more than two million Brits have become new homeowners.

TSB said the prospect of a rate rise is worrying news for more than half of the home-owning population, who say they are already struggling with household bills.

More than a quarter of those that took part in the poll said they would have real difficulty if their monthly mortgage repayment increased by £99.

Ian Ramsden, director of mortgages at TSB, said: “The statistics included in TSB’s report are fairly shocking and clearly there’s a lot of work to be done to help Britain’s homeowners understand how they can accommodate a rate rise.

“But there is no need to panic; a little bit of planning now can make a big difference in the future.”

TSB’s research also looked at how people would react to a base rate increase and found that many would need to make some big changes to meet any increased monthly mortgage repayments.

Just under three quarters said they would budget and make spending cutbacks in the event of a rate rise, 43 per cent said they would try to switch to a cheaper mortgage, and 33 per cent would prioritise debt repayments and pay the most important ones first.

TSB spoke to 2,000 UK adults with mortgages during September 2015.