Consumers ‘Worried’ At Thought Of Base Rate Rises
Keywords: interest, rate, rises, worrying, credit, cards, personal, loans, finance, secured
The prospect of changes to the base rate by the Bank of England’s monetary policy committee (MPC) are a source of concern for millions of Britons, the publication of new figures reveal.
In research by ICM commissioned by Intelligent Finance, some 41 per cent of consumers feel either “worried” or “extremely worried” in anticipation of the MPC’s monthly meetings. And with the committee voting to increase the base rate five times over the past 12 months, industry experts have predicted that more rises could be due to take place within the forthcoming months, which could consequently put even more pressure on consumers’ ability to pay off personal loans and other debts.
However, despite these concerns, only just over a quarter (26 per cent) of those surveyed claimed to have products that guard them against interest rate changes. The company reported that opting for an offset mortgage can help borrowers “shield” themselves from the “negative impact” of base rate hikes by the MPC. Instead of receiving interest on money put into their savings accounts, consumers are not liable to pay interest on an equivalent amount owed in a mortgage, which in turn gives them the flexibility to lower their monthly repayments.
The findings also indicated that young people are the most anxious about the prospect of rate rises, with four out of ten 18 to 24-year-olds said to be concerned about the effect that a hike may have on their personal finances, with a further ten per cent “extremely worried”. Despite these concerns, only seven per cent of people in this age group have actually taken out a product to protect themselves from any interest rate changes. Meanwhile, men are said to be more relaxed than women about the possible impact of MPC meetings. Some 38 per cent of males do not take any notice of upcoming rate changes, in comparison to less than a quarter of females.
ICM’s study also showed that twice as many women (14 per cent) as men have grave worries about base rate rises. However, it was females who seem to be more willing to choose those financial products which could help secure their monthly repayments, as a third of such consumers take precautions in their choice of services, in comparison to about a fifth of males.
Commenting on the findings, Mark Parker, managing director for Intelligent Finance, said: “With interest rates on the rise and purse strings tightening, it’s important to make every penny work as hard as possible. Offset mortgages give peace of mind, negating the effects of a rate hike and giving the flexibility to lower monthly payments. This is good news whether you’re a worrier or not!”
In related news, over 2.5 million Britons (about six per cent of the population) claim that despite a climate of rising interest rates placing more pressure on their personal finances they do not know how much debt they are in via personal loans, credit cards and other forms of borrowing. Young people were suggested as having the most difficulty in judging their financial situation as some 15.4 million do not know their total debt within 100 pounds.
Steve Smith writes for 1 stop finance shop where visitors can apply for UK debt consolidation loans and also focuses on cheap personal loans and bad credit secured loans for UK residents. Visit Today: www.1stopfinanceshopuk.biz
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