Though the base rate is low at 0.5%, many banks and building societies may hike rates well before the Bank of England does. Are you at risk?
StretchedMany clearly are. If you have a £100,000 mortgage, your repayments would climb £60 a month if interest rates were to rise 1%. That's an extra £720 to find from your take-home annual pay. Many British mortgage owners on interest-only details are even more exposed.
Then there's all the aspiring home-owners considering George Osborne's Help to Buy scheme. A rush to buy would likely jack up house prices further, but also increase the amount of home owners - many already stretched to the max on teaser rates - buying into the property market when interest rates, realistically, can go in one direction.
StrugglingLonger term there's little padding for things to get better. Some people, particularly couples on joint incomes, may be able to manage small interest rate rises. But working longer isn't available for may British workers as many roles are already part-time. Meanwhile UK wage growth remains close to zero.
Shafted?Other pressures build: gas and electricity prices are up 8.3% and 7.7%, compared to a year ago, Asda's report claims. The cost of borrowing for many people is way more expensive than any headline 0.5% Bank of England base rate, despite vast amounts of QE shovelled at the banks.
For example, the cost of a business loan for almost 20% questioned in a recent Federation of Small Businesses Credit index saw rates on offer as high as +7.99% with some being offered loans at up to 11%. No wonder the Bank of England is nervous. There's little slack left.
Remember when mortgages were offered on three times an annual salary...
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