Concerns are rising that many homeowners in the UK could be hit with big debt related problems later this year as a result of base interest rate increases, which many believe will occur in the spring. Whilst the base rate has been at its record low of just 0.5 percent for twenty two months now many believe that it could rise in April or May, as the Monetary Policy Committee tries to keep a lid on inflation.
An increase in interest rates could send the repayments of some homeowners soaring by hundreds of pounds a month, and in the current financial climate this could lead to serious financial issues that tip some people over the financial edge. For those on fixed rate mortgages the interest rate increases won’t have any effect at present, but those on variable rate loans will see a difference in the amount that they have to pay each month.
For those who do have to make higher repayments on the mortgage following interest rate increases it could compromise on their ability to meet other financial commitments, which will lead many to seek debt related advice from financial experts in the field. The demand for debt advice is already sky high due to the financial problems caused by the credit crunch and the recession, and this could push numbers even higher.
One official said: “With all of the problems that are hitting consumers at the moment it is little wonder that more and more are looking for advice from financial experts. The high cost of living, VAT hikes, job losses, and government cutbacks are already playing havoc with consumer finances. An interest rate increase could be the final nail in the coffin for some people.”
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