Over half of UK homeowners believe an interest rate rise of just 1% would have a negative effect on their finances as mortgage payments start to rise.
According to research from Equifax, more than 50% feel they will struggle financially to meet an increase in their monthly mortgage repayment.
At the August meeting of the rate-setters at the Bank of England, two members of the Monetary Policy Committee voted to raise interest rates - the first time any member has voted for an increase in over three years. With seven members voting in favour of keeping rates on hold at their historic low of 0.5%, no change was made. However, the fact remains that an increase is coming soon, which is alarming some homeowners who fear that a sudden increase in mortgage rates could catch them unawares.
Underlining this fear is that many homeowners do not know how an interest rate rise may affect their ability to meet their monthly mortgage repayments. Indeed, when asked how much a potential rise of 1% would affect their monthly mortgage repayment, 40% of homeowners conceded that they did not know.
Even though a third of the homeowners surveyed are currently protected by a fixed rate mortgage, the research found that many are already thinking about how they can prepare for any rise that occurs before their fixed rate deal ends.
This makes perfect sense, and whether you think you may struggle to cope with a rate rise or not, now is an ideal time to reconsider your mortgage deal anyway.
Mortgage rates have recently been rising in anticipation of an increase to base rate, with the run of record-low mortgage rates undoubtedly a thing of the past.
A fixed rate mortgage gives borrowers certainty over what their mortgage repayments will be for the length of the mortgage term. At a time when interest rates are only likely to go up, this reassurance should appeal to the majority.
If you're coming to the end of your current fixed rate mortgage deal, or are sitting on a tracker deal where the repayments could soon start to rise, consider your options now rather than waiting for the base rate itself to head north.
Check out our best buy tables to find the top remortgage deals.
Use our mortgage calculator.
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