Only 4 per cent of mortgage holders would be significantly affected if interest rates were to rise to 2.5 per cent from their current historic low, says the Bank\u2019s annual survey of household finances.\u00a0\u00a0<\/p>\n
The Bank has sought to understand the impact of the impending rate rise, which is regarded as being likely given the current five-year stretch of just 0.5 per cent.<\/p>\n
However, the calculation is based on the proviso that household incomes rise by 10%, without which 37% of mortgages would need to respond to a rate rise.<\/p>\n
In its report, the Bank of England said: \u201cThese results do not imply that increases in interest rates from their currently historically low level would have unusually large effects on household spending.\u201d<\/p>\n
With the pace of economic recovery in recent years, and especially over the last 12 months, many have expected a rise in interest rates to follow.\u00a0 This, experts have said, would pose dangers to those who have been taking advantage of low rates to take out high mortgages and loans.<\/p>\n
In particular, the Bank of England has issued a warning to middle-class families, who have benefited from a five-year stint of cheap borrowing.\u00a0 These families will suffer the most when interest rates increase, according to the Bank.<\/p>\n
Andrew Tyrie, the Conservative chairman of the Treasury select committee, issued a similar warning.<\/p>\n
He said: \u201cInterest rates have been so low for so long now that some might conclude this is the new normal.\u00a0 They shouldn\u2019t.\u201d<\/p>\n
Meanwhile, the Labour MP John Mann also pointed to middle-class families as being \u201cthe group that is most vulnerable\u201d to a rate rise.<\/p>\n
Despite this, however, the Bank has said that the number of people falling into arrears on their mortgage would be fewer than in 2007.\u00a0 It also emphasised that when interest rates do rise, the pace of increase will be gradual to offset potential financial damage to the most vulnerable.<\/p>\n","protected":false},"excerpt":{"rendered":"
Only 4 per cent of mortgage holders would be significantly affected if interest rates were to rise to 2.5 per cent from their current historic low, says the Bank\u2019s annual survey of household finances.\u00a0\u00a0<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/565"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=565"}],"version-history":[{"count":1,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/565\/revisions"}],"predecessor-version":[{"id":566,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/565\/revisions\/566"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=565"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=565"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=565"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}