Rates rise confusion for homeowners (News (General))

by administrator , Thursday, July 08, 2010, 04:52

Almost three-quarters of people with a mortgage have no idea what impact an increase in the Bank of England's base rate would have on them, a survey has found.
The newly formed Consumer Financial Education Body (CFEB) found approximately 74% of people did not know how a 1% rate hike would affect their monthly outgoings.

Some 15% could not recall what type of mortgage they have. They could potentially be unaffected by a rate hike if they have a fixed rate deal, but would need to adjust to the new rates if they have a variable rate mortgage. A further 15% were unaware of when their current mortgage deal comes to an end.

The lack of awareness comes despite the fact that 51% of people with a mortgage expect interest rates to rise during the coming nine months.

Just over half of people said they had no plans to review their mortgage, or would leave doing so until just before their existing deal expired, while 14% admitted they did not know what they would cut back on if their mortgage repayments rose by £200 a month.

Chief executive of the Consumer Financial Education Body, said: "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."