A new survey has indicated that millions of homeowners are worried about the impending benchmark rate hike by the Bank of England (BoE) and its impact on mortgage payments.
The Monetary Policy Committee (MPC) of BoE voted to keep the interest rate at the historical low of 0.5 percent for the 24th month in a row. However, with inflation hovering around a little over 4 percent, more than twice the bank’s targeted rate of 2 percent, many borrowers expect rates to rise sooner rather than later.
Around 8 million homeowners (68 percent of total borrowers) could see their monthly payouts jump if the base rate is increased by the central bank, the survey by uSwitch.com found. Nearly a quarter (22 percent) of Britons are worried about the impact the rate hike will have on their finances.
The situation may become worse for employees since rising inflation has been a cause for worry as well. Only 11 percent of workers may see a pay-hike in 2011 while a whopping 56 percent of employees are expecting a pay-freeze.
“With the cost of living outstripping pay, all consumers need to start paying serious attention to their spending habits. Consumers should follow the government’s lead and try to reduce their own budget deficit”, said Ann Robinson, director of consumer policy at uSwitch.com.