Taylor Scott International News
Whilst January is traditionally the time to get finances in order and plan for the year ahead, new research reveals that there is widespread confusion around UK interest rates and when they might rise. Some 46% don’t know that the current Bank of England base rate and 88% are unaware of its interest rate forecast for a rise in October 2015, according to research from Barclays Mortgages produced in partnership with the Centre of Economic Business Research (Cebr). Some 61% of home owners are uncertain when interest rates might rise and half with variable rate mortgages aren’t aware their repayments could rise, the research also shows. And overall 76% are not putting money aside to be able to cope with interest rate increases despite the Cebr predicting a minimum total mortgage payment rise of £723.8 million across the UK. The research reveals that home owners cite different political and regulatory statements, conflicting family views and changing market commentary as the main reasons behind this widespread uncertainty. The lack of awareness may contribute to UK mortgage holders experiencing financial difficulties in 2015, according to the research. Just under half, 49.5%, of those with a variable rate mortgage don't expect or aren't sure that their mortgage repayments will rise in 2015, despite the Cebr predicting that home owners across the UK could face a potential £1.1 billion total increase in mortgage repayments by the end of 2015. This is based on the Cebr's 'sharp but potential' model suggesting three rate rises in 201 (taking the base rate from its historic low of 0.5% to 1.25% by December 2015, something which is not considered unfeasible by economic experts and which would increase average mortgage repayments for individuals by £118.974. The second 'medium' model focused on a single interest rate rise of 0.25% in May 2015 and would see home owners across the UK paying an additional total of £904.2 million in their mortgage repayments by the end of 2015 averaging at £101.33 per home owner. At a very minimum the Cebr predicts an average annual £81.12 increase in mortgage payments for individuals by the end of 2015. When looking at the UK as a whole, this 'gentle model' would result in a total £723.8 million annual increase in repayments. The research report says that whatever the increase in repayments, it is clear that people are underprepared for any interest rate rise. The survey also found 45% felt they may have missed out on better mortgage rates and therefore paid out more because they weren't sure whether or not to fix or change their mortgage. ‘Our report shows there is widespread confusion over interest rates and we encourage home owners to review their current situation and get advice on what their next mortgage step should be,’ said Andy Gray, Barclays managing director of mortgages. ‘We want our customers to remain financially fit in the face of potential interest rate rises in 2015, and believe the impending rise that… Taylor Scott International
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