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One-third of mortgage borrowers would struggle if interest rates rise

A third of mortgage borrowers say they will struggle to meet their repayments if interest rates rise by just 2%, with those in the south-east most concerned about coping with an increase in their monthly loan bills, according to ICM research.

Last week the Bank of England voted again to keep the base rate on hold at 0.5%, the historic low it has now been at for more than five-and-a-half years. Although it is looking increasingly unlikely that it will approve an increase before next year’s general election, the governor of the Bank, Mark Carney, has indicated that at some point rates will have to rise, and that they will continue to do so until they reach around 3%.

The ICM survey reportedly asked mortgage borrowers how far, on a five-point scale, they agreed that a two-point rise in interest rates would mean that they would ‘struggle’ to pay their mortgage. Across Britain as a whole, 14% answered with a 5, indicating they ‘strongly agreed’ that they would struggle, while another 18% gave a 4, indicating that they too could struggle considerably. Taken together, this means that 32% of borrowers, a third of the total, are worried about such a rise, even though it would still leave interest at rates that are low by historical standards.

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