Britons unprepared for a potential hike in interest rates

Michael Lloyd

April 10, 2018

uk finance

With today marking one month until the Bank of England (BoE) will announce if there is to be an increase in interest rates, almost half (47%) of Britons are unaware of a possible increase.

CYBG’s digital banking service B also found over half (57%) admitted to not fully understanding how a rise in interest rates will impact their financial situation.

Two fifths (41%) of home-owning Britons are concerned about their ability to meet higher mortgage repayment and fifth (21%) said it would make it harder for them to afford higher repayments for other borrowings.

Helen Page, innovation director at B, said: “This research highlights the lack of awareness consumers have about what a possible interest rate rise means for them across all aspects of borrowing.”

The research suggests homeowners – and aspiring homeowners – will be hardest hit. A quarter (27%) of those already on the property ladder thought a rise would make it harder or near impossible for them to upsize.

And a fifth (18%) said it would make it harder or near impossible for them to buy their first home.

Page added: “We’ve seen a 50% year on year rise in customers wanting a five-year fixed rate mortgage.

“Clearly people are finding longer-term fixed rate mortgages increasingly appealing as there is security in knowing a rate rise won’t affect you.

“That said nearly three quarters (71%) of the consumers we surveyed aren’t preparing for a potential interest rate rise across all debt next month so some parts of the population are switched off to what a rate rise could do to their monthly budget.

“After years of interest rates remaining low it’s important that consumers prioritise getting financially fit and this means getting a full picture of how they will manage their finances – whatever the outcome of the BoE’s announcement next month.”

Sign up to our daily email