More than one in seven people will be left struggling to pay their mortgage after the Bank of England raised interest rates by another 0.25 percentage points, to 5.5 per cent in May.
Research carried out by an independent online mortgage broker, reported that some 6.5 million people surveyed earlier in the month would struggle if rates went up again. The hike in interest rates means borrowers with a typical £100,000 mortgage will be paying out £60 more on monthly repayments than last summer. People between the ages of 35 and 44 said that they were most concerned about the latest rise in interest rates, with one in five people in this age range claiming that they would struggle.
The latest rise is the Bank's fourth in less than a year, and puts interest rates at a six-year high. However, the Bank stopped short of realising homeowners worst fears and hiking rates by an unprecedented 0.5 per cent, as some pundits had predicted.
Rates have now risen a full 2 percentage points since hitting lows of just 3.5 per cent four years ago, making people's
mortgages almost 60 per cent more expensive than they were in 2003.
Borrowers will have to adjust to having higher interest rates after having low rates of interest for so long. Borrowers should also act now and scour the competitive market place for a better deal and try to make their monthly repayment as affordable as possible. By doing nothing on a variable rate means that you could struggle.
More than 50 per cent of outstanding
mortgages are currently on variable rate deals, meaning that they will feel the full force of the rate rise.
Economists are looking at another increase by August, although one expert warned this week of the "very real possibility" of back-to-back increases.
