Third of homeowners potentially at risk as research highlights little understanding around the impact a rise in interest rates would have

The latest research commissioned by Callcredit Information Group has found that almost a third of homeowners do not know what impact a rise in interest rates will have on their monthly mortgage repayments.

The research, undertaken by YouGov*, looked at how people perceived a possible interest rate rise might affect their finances.

Worryingly 13 per cent of those within the higher band of mortgage repayments, £1000 - £1500pcm, have little awareness of exactly how much disposable income they have each month and as such are leaving themselves vulnerable to the impact an interest rate increase might have on their financial circumstances.

As industry experts warn of expected interest rate rises, Callcredit is urging home-owners to take greater control of their finances to avoid any risk of them being unable to meet increased mortgage repayments.

Jacqueline Dewey, Managing Director, Consumer Markets, commented: “With interest rate rises expected in the coming months it’s very worrying to see such a large number of people who do not have a full understanding of their finances.

“When asked the question ‘what are your monthly mortgage repayments?’ some respondents didn’t even know. This, combined with 61 per cent confirming they never check their credit report, highlights the need for consumers to get a grasp on their finances and understand how any rate rises might impact them.”

For the first quarter of 2014 1 in 400 mortgages had arrears equivalent to 10 per cent or more of the mortgage balance**. According to Shelter’s latest research there is as many as one home in every 34 that could be at risk of repossession in England – that is one home in every street. 

Jacqueline concluded: “Since the financial crisis, borrowers have benefitted from low interest rates, which have allowed for households help to meet their repayments despite the rise in cost of living. It’s not a case of “if” but “when” interest rates will rise and therefore it’s vital for borrowers to plan for how they will cope with a change in their circumstances. Checking your credit report regularly is a good place to start as this contains details of most of your financial commitments, allowing you to view exactly what your monthly out-goings are.”

*All figures, unless otherwise stated, are from YouGov Plc.  Total sample size was 2,010 adults. Fieldwork was undertaken between 28th – 29th August 2014.  The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).

** Figures  from Council of Mortgage Lenders