The Bank of England’s unprecedented decision to hold the base rate at 0.5% for the sixth consecutive year in a row has seen interest rates remain at all time lows.
It was cut to this level way back in March 2009, which is great news for those looking to jump onto the property ladder, remortgagers and homeowners alike. However, what is important to bear in mind is that this scenario will not last forever. At some point, the base rate will rise and so too will mortgage rates.
With that being said, recent research shows that just over three quarters (78%) of those who are currently on a variable rate mortgage are not preparing for the likelihood of a rise in interest rates, which will bring with it increased mortgage payments.
The survey conducted by Equifax has further revealed this is despite the fact that 80% of borrowers know there is the potential for a rate increase within the next year.
The online study, conducted by YouGov of approximately 400 variable rate customers highlighted several homeowners on a standard variable rate mortgage are oblivious to exactly how much their monthly payments could soar when interest rates do rise.
In order to combat an increase in mortgage payments, 41% are simply prepared to stay at home and go out less, while one third would scale back their annual holidays, with 6% reducing their personal pension contributions.
With many homeowners enjoying the current climate of low interest rates, it is important not to become too complacent and be lured into a false sense of security. A rise in interest rates is inevitable, so having an unnecessary panic on your hands is the last thing you want when they do go up.
Having your affairs in order, being prepared and making that move to secure a good mortgage deal before they disappear could not be more vital. Seeking impartial mortgage advise can help you do just that and by acting now, you can still beat the rate rise.