Many homeowners are already struggling with mortgage arrears and the prospect of an interest rate rise could push more into debt.
Many homeowners will struggle to keep a roof over this head this year, warns national debt charity Consumer Credit Counselling Service (CCCS).
The charity counselled 90,000 homeowners last year who on overage owe just over £30,000 in unsecured debt on top of their mortgage.
To highlight the impact of an interest rate rise, CCCS undertook research on its homeowning clients which found that a 2% increase in mortgage rates will lead to a £307 rise in monthly mortgage payments by its clients across the country.
As the average mortgage payment of a CCCS client is currently £561.61, this would be a 55% increase in monthly mortgage payments, meaning that homeowning clients would have to spend almost £3,700 more a year.
Delroy Corinaldi, CCCS External Affairs Director, says: “So many households are just managing to make ends meet, that even a small increase in the cost of their mortgage may push them over the edge. As far as possible, families need to think how they could pay such increases and seek help at the earliest opportunity if they feel that they cannot cope.”
A worry is that those already struggling with debt problems are using credit cards to pay their mortgages. If so an interest rate rise could immediately impact their ability to pay.