Mortgage holders unaware of potential impact of interest rate rise

8 July 2010

According to the newly formed Consumer Financial Education Body (CFEB), around 74% of people with a mortgage said they did not know how a 1% increase in the Bank of England`s base rate would affect their monthly outgoings, The Telegraph reports.

Meanwhile, 15% of people don`t even know whether they`ve got a fixed-rate mortgage (in which case an increase in interest rates wouldn`t affect them) or a variable-rate mortgage (meaning their monthly payments would increase when the base rate rises). A further 15% of people are unaware of when their current mortgage deal will come to an end.

The news comes despite the fact that 51% of mortgage holders expect interest rates to rise during the next nine months.

Chief Executive of the CFEB, Tony Hobman, said: "Interest rates have been at record lows for some while now. Although there is uncertainty about when this will change, it is clear from our research that many people with mortgages haven`t thought about what it would mean for their monthly payments, or where they would find the extra money in their household budget if their mortgage rate was to go up.

"Lack of time means many of us often put off reviewing our finances, but it doesn`t have to be time consuming to keep on top of your money matters."

Tags: mortgage, mortgage deal, end, interest rates, interest rate rise, increase

Fees payable when continuing service is provided. Repaying debt over a longer period may increase the total amount to be repaid. Calls are recorded and are usually free from UK landlines. Mobile phone users may be charged and should check with their service provider.