A substantial number of mortgage holders will be caught on the wrong foot when Bank of England hikes the base rate this year, as it is been widely expected to do in May.
A recent survey conducted by Shelter – the housing and homelessness charity, found that nearly 25 percent of homeowners are ignorant about the key benchmark rate being held at a historic low of 0.5 percent by the central bank.
Surprisingly, four percent of mortgage holders surveyed believes that current lending rates are much higher than they have been in the past while nine percent believes that current rates are a little higher than they haven in the past.
The survey thus, correctly concludes that millions of people will be caught by surprise when their monthly payments go up as the Bank of England raises the base rate sometime this year.
“Millions of homeowners could be pushed to the brink unless they start making preparations now”, said Campbell Robb, chief executive of Shelter.
“We are urging people to find out if rising interest rates will affect them and prepare themselves for increasing mortgage costs by seeking advice early to help avoid putting their home at risk”, he added.
After the Monetary Policy Committee (MPC) of Bank of England voted against a rate hike this week, many economists believe that the central bank may not raise rates this year, lest it derails the fragile economic recovery.