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Millions would struggle with mortgage rate rise

Millions would struggle with mortgage rate rise

Category: Mortgages

Updated: 14/01/2011
First Published: 13/01/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Millions of mortgage borrowers would struggle to meet their repayments if rates were to rise by just 1%, new research has revealed.

A survey of variable or tracker rate mortgage holders by MarketGuard suggests that 2.7 million people would experience difficulties if they had to find an extra £100 per month.

If repayments increased by £200, the equivalent of a 2% rise in interest rates, 4.8 million people would struggle to find the necessary money.

Over two thirds of those surveyed admitted to being worried about an interest rate rise.

When asked whether they would be willing to switch to a fixed rate mortgage, 60% said they would consider making such a move in order to limit their monthly payments.

Unfortunately, it is not a course of action open to all homeowners at present, with many being excluded from remortgaging and finding it difficult to switch because they are on a self cert, high loan-to-value, credit impaired, or interest only mortgage.

"This research reveals just how vulnerable the British public is right now to a rise in interest rates," said Chris Taylor, CEO of MarketGuard.

"It is clear that we face a major problem if rates start to move dramatically upwards in response to inflationary pressure.

"Fixed rate deals are popular because people need the certainty of knowing that their repayments won't increase if rates rise.

"However, there are many mortgage holders in the UK who are unable to find a suitable fixed rate deal.

"This, coupled with the fact that 2.7 million will struggle if they have to find over £100 a month extra to pay on their mortgage, means these people are at the mercy of the financial markets."

While it isn't as easy as it once was to secure a fixed rate mortgage, there are still plenty of competitive deals on offer.

Check out our fixed rate mortgage best buy charts to see all the latest and greatest deals.

Find the best mortgage rate - Compare best selling mortgages

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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