Experian, the UK’s leading credit search agency, has recently undertaken a survey of mortgage holders and concluded that most homeowners are ‘clueless’ regarding the impact changes in interest rates will have on their mortgages.
The results make staggering reading as the latest Personal Credit Index Survey shows that more than 70 per cent of homeowners were unable to estimate correctly the effect that a 0.5 per cent increase in interest rates would have on the monthly repayments on an interest-only mortgage of £100,000. The correct answer is approximately £40 per month. Almost a fifth of those surveyed thought the increase would be £80 or more and nearly a fifth thought the increase would be £10 or less.
Experian believes that the lack of understanding of the true effect of interest rate rises could be one of the reasons why consumer confidence showed an upward trend nationally in the early autumn, with more than half of those surveyed currently happy with their level of personal indebtedness. In the North, however, consumer confidence dipped somewhat.
“Thousands of fixed-rate and discounted mortgages are set to come to an end over the next few months and, if inter-bank lending terms remain tight, it could be difficult to find good re-mortgage deals, especially if your level of indebtedness relative to income is high,” says Emma Sear. “If you need advice on your mortgage or re-mortgage or with formulating a financial strategy for yourself and your family, contact us for advice.” |
