Two in five mortgage holders have admitted to being concerned about the impact a rise in the base rate of interest could have on their monthly mortgage repayments as an increase looms ever larger on the horizon.
Two members of the Bank of England's Monetary Policy Committee voted to raise interest rates in August - the first time any member has voted for an increase in over three years.
According to the minutes of the latest committee meeting, Ian McCafferty and Martin Weale both wanted to see an increase of 25 basis points, splitting the vote for the first time since July 2011.
However, with seven members voting in favour of keeping rates on hold at their historic low of 0.5%, no change was made.
But, the fact remains that an increase is coming soon, and 41% of mortgage holders interviewed by Ipsos MORI on behalf of Halifax said they were worried about the implications it could have on their finances.
Groups who are more likely than others to say they are concerned about interest rate rises impacting their mortgage payments are women (45%), those aged 35-44 (50%), families with children (48%), and those with variable rate mortgages (57%, compared with 43% of those with a fixed rate mortgage).
Nationally, more than one in ten mortgage holders (13%) expressed concern that they would find it difficult to afford their monthly mortgage repayments if the amount was up to £50 higher. A third (33%) said they would struggle if the amount was up to £100 higher, with the figure rising to 42% for those on variable rate mortgages.
If their mortgage payment was £100 higher, a third of mortgage holders (30%) felt that they would have to reduce spending on everyday essential items such as food, energy, clothing and insurance.
"With the base rate remaining at 0.5% for over five years, a significant number of homeowners have not yet experienced the effects of a rate rise," said Craig McKinlay, Mortgages Director at Halifax. "While responsible mortgage lenders take into account potential rate increases as part of the affordability checks in the mortgage application process, the way in which people manage their remaining disposable income will be a key factor in how well they can adjust to any changes in rates."
Whether you think you may struggle to cope with a rate rise or not, it may be a good time to reconsider your mortgage deal. Mortgage rates are steadily rising in anticipation of an increase to base rate, and the unfortunate fact is that the run of record-low mortgage rates has come to an end.
Now's the time to take a look at what's out there so you can fix to a competitive deal, thereby keeping your payments low for as long as possible. If you're coming to the end of your term but choose to hold off, you may be disappointed in a few months time…
Find the best mortgage deal with our mortgage calculator.
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