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 51 per cent of Londoners are unaware of a possible increase, while over half (51 per cent) 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 (41 per cent) of home-owning Britons are concerned about their ability to meet higher mortgage repayments, while a fifth (21 per cent) 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. Over a quarter (29 per cent) of Londoners on the property ladder say a rise would make it harder/near impossible for them to upsize, while nearly a fifth (23 per cent) say it would make it harder/near impossible for them to buy their first home (the highest of any region).
Helen continues: “We’ve seen a 50 per cent 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 two thirds (66 per cent) of Londoners 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.”