UK Consumers Unprepared for a Potential Hike in Interest Rates
10 April 2018
Research from Digital Banking Challenger B Reveals Majority of Britons Don’t Understand Implications of Rate Rise.
Tuesday 10th April 2018, London – With today marking one month until the Bank of England (BoE) will announce if there is to be an increase in interest rates, research from CYBG’s digital banking service B has revealed 47% of Britons are unaware of a possible increase, while over half (57%) admit to not fully understanding how a rise in interest rates will impact their financial situation.
Perhaps of most concern, if interest rates are to increase next month, two fifths of home-owning Britons are concerned about their ability to meet higher mortgage repayments, while a fifth say it would make it harder/near impossible for them to afford higher repayments for other borrowings.
According to Helen Page, Innovation Director at B: “This research highlights the lack of awareness consumers have about what a possible interest rate rise means for them across all aspects of borrowing.”
The research suggests homeowners - and aspiring homeowners - will be hardest hit. A quarter (27%) of those already on the property ladder say a rise would make it harder/near impossible for them to upsize, while a fifth (18%) say it would make it harder/near impossible for them to buy their first home.
Helen continues: “We’ve seen a 50% year on year rise** in customers wanting a five-year fixed rate mortgage. Clearly people are finding longer-term fixed rate mortgages increasingly appealing as there is security in knowing a rate rise won’t affect you. That said nearly three quarters (71%) of the consumers we surveyed aren’t preparing for a potential interest rate rise across all debt next month so some parts of the population are switched off to what a rate rise could do to their monthly budget. After years of interest rates remaining low it’s important that consumers prioritise getting financially fit and this means getting a full picture of how they will manage their finances – whatever the outcome of the BoE’s announcement next month.”
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