View more on these topics

Rate rise would be ‘rude awakening’ to homeowners: Moore Stephens


An interest rate rise of just 0.5 per cent would deliver a “rude awakening” to many mortgaged homeowners, according to accountancy firm Moore Stephens.

Moore Stephens says that Bank of England data shows UK households are currently paying £39.2bn in interest on debt that is likely to be affected immediately by an interest rate rise.

If interest rates rose to 0.75 per cent from their current all-time low of 0.25 per cent, that figure would jump to £42.6bn.

The accountancy firm says the main driver will be variable rate mortgages. It adds that UK borrowers currently have £591bn of this type of loan at an average rate of 4.23 per cent.

Moore Stephens partner Michael Finch says: “There are a huge number of families with floating-rate mortgages who may get a very rude awakening on affordability once rates start to return towards what has historically been their normal level.

“There is a very real risk that a lot of people who have stretched themselves to afford a home will find themselves unable to keep up repayments when their 4 per cent mortgage rate becomes 5 per cent, 6 per cent or 7 per cent.

“That will get even worse as more and more fixed rate mortgages come to an end, and homeowners are forced to come to terms with higher interest rates.”

But a 0.5 per cent base rate rise would also have a knock-on impact on consumer debt.

Moore Stephens says households would immediately pay an extra £440m in interest on their credit card debt, overdrafts, car loans and unsecured personal loans.



Borrowers should weather base rate rises: UK Finance

Mortgage borrowers are well-placed to weather base rate rises over the next couple of years, according to the UK Finance mortgage board. The board, formerly the Council of Mortgage Lenders, says the UK could see a rate rise within 12 months. UK Finance says most borrowers are likely to “withstand rate increases higher than anything […]


Bank of England divide deepens over interest rates

Division within the Bank of England on raising interest rates still shows no sign of healing ahead of next week’s decision on the issue, recent interviews with policymakers suggest. Monetary policy committee member Michael Saunders argues the central bank should raise rates, according to the Times. Saunders says the Bank is pushing the economy too […]

What a base rate rise would mean for mortgages: Bamford

Some MPC members think it’s time to lift BBR back to 0.5 per cent, and we all know which borrowers would be hardest hit They say even the longest journey starts with a single step and, given the news from the Monetary Policy Committee this month, one can’t help but feel we are embarking on […]


TMW confirms date for launch of retention proc fees

The Mortgage Works has confirmed that it will pay retention procuration fees to mortgage brokers as of 1 August. The intermediary arm of Nationwide Building Society announced earlier this year that it would begin paying for retention business and has now confirmed the commencement date. It will pay a gross proc fee of 0.20 per […]

Building long-term relationships

Call us old fashioned, but we want to get to know you personally. That’s why we give you a named case manager and underwriter to look after all your cases from start to finish. Your underwriter will happily give you their number, so you can ring them directly with any questions you have. And your […]


News and expert analysis straight to your inbox

Sign up