The survey found that 25% of all mortgage holders had variable rates – meaning that mortgage payments for a quarter of homeowners would increase within the month, should the BoE decide to raise interest rates.
The possibility of a Base Rate rise in the November 2 monetary policy meeting was made more likely by better-than-expected GDP figures released this week which saw the UK economy grow by 0.4% in the July-September period.
According to UK Finance (previously the Council of Mortgage Lenders) around 3.9 million mortgages are currently on a variable rate product, potentially leaving millions of mortgage bills susceptible to a rate rise.
Of those households with variable rates, 31% told Which? that their day-to-day living would be impacted if the rates increase by the anticipated 0.25%.
But 5% — or one in 20 – of respondents said they would be “struggling financially” should they face such a rise.
Preparation and awareness
The consumers’ association also found that 42% of all households with existing mortgages have been homeowners for 10 years or less – raising questions regarding the level of preparation and awareness of just under half of all mortgage holders who have never seen a BoE rate rise.
Harry Rose, editor at Which? Money, said: “With one in 20 variable rate mortgage holders saying they would struggle to make ends meet, it’s important that preparation to deal with the impact of a hike starts now.”
“Planning ahead with an effective budget is one simple way to stay on top of your finances,” Rose continued. “But we’d also like to see banks, lenders and utility companies reaching out to those deemed most vulnerable. For those concerned – speak to your bank and seek urgent advice. Plan now to avoid being caught out.”
The survey was conducted by Populus on behalf of Which?, using a sample of 2,101 adults online across the UK.