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1.75m homeowners unprepared for mortgage increase


A UK charity has revealed that 1.75 million UK homeowners will never have faced a rise in the Bank of England (BoE) base rate before, meaning they may be unprepared for a rise in their monthly payments.

Analysis from The Money Charity has shown that there has been 1,762,400 first-time buyers since the BoE last increased the UKs base rate, in July 2007. People who received a mortgage after these dates will never have seen their monthly repayments rise, as they saw interest rates fall to some of their lowest levels ever since the financial crash in 2008. More than one million of these homeowners bought their first property when interest rates hit rock bottom in March 2009, meaning they’ve only ever experienced the very lowest rates.

Homeowners have benefited from low interest rates the last over the last 5 years, but due to inflation outstripping wage growth, it has also been harder for people to save any money.

The charity has now warned that a higher payment may take homeowners by surprise, especially because at the moment mortgages are cheaper than ever.

Michelle Highman, Chief Executive of The Money Charity, said:
“No-one knows when interest rates will rise, but when they do mortgage rates won’t be far behind. The 1.75m households who’ve never experienced an interest rate rise could find themselves in for a nasty shock. And even those who’ve had mortgages for longer might have got used to their payments staying the same.

“Before rates rise is the perfect time to get ahead of the game and work out what you can afford, and where you could change your spending habits. We have tools like our free Budget Builder than can help you get started,

“And if keeping up your mortgage payments is already a strain, contact a free, impartial provider of debt advice like StepChange debt charity.”

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