Consumers should make the most of low rates
According to an Equifax survey of consumers who have accessed their credit file, more than a third (36.1%) have been making the most of low interest rates to pay off more of their debts.
However, nearly a third (31.4%) say they still have the same level of debt as they did a year ago, suggesting that the rising cost of living and other financial pressures such as pay freezes and job loss have made it hard for them to capitalise on the recent low interest rates.
“The Bank of England’s Financial Stability Report is warning that two thirds of borrowers who are now on variable rate deals could see their costs increase in 2011,” said Neil Munroe, external affairs director.
“For these individuals, clearly if the base rate increases next year, they could face larger monthly mortgage payments which could be hard to manage alongside other increases in living costs. But despite this threat, our research also suggested a reasonable level of optimism about family finances in 2011.”
Around 42% of respondents to the Equifax survey said they feel more optimistic about their finances going into 2011, compared to this year. And 63% are not worried about the security of their job next year although only 33% think they will get a pay rise.
“For some of those individuals who are currently on variable interest rates there is likely to be some effort to get a new fixed rate deal ahead of any base rate increases” concluded Neil Munroe. “And to get the best deal, they need to ensure their credit rating is as strong as possible.”