As I have mentioned before, all the financial experts are warning of interest rises this year, possibly in the first half of the year.
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Good news for savers, but unlese advice is your mortgage rate is fixed, you will see your mortgage payments increase.
There’s a good peice in the Telegraph today written by Harry Wallop, their Consumer Affairs Editor.
He suggests households will need to find an extra £1,800 a year by 2015 just to pay the interest on their credit cards and other loans as interest rates rises.
“Interest rates on credit cards and loans are expected to increase by between 2 percentage and 3 percentage points in the coming four years meaning the average household will have to divert a significant chunk of their disposable income to paying their debt, accountants PricewaterhouseCoopers (PWC) said yesterday.
The report comes just a few days after many economists predicted that the Bank of England would be forced to start increasing interest rates in the first half of this year, much earlier than originally expected.
Their warnings came after surprisingly high so-called factory gate inflation figures – the prices that manufacturers pay for their raw materials shot up because of the rising oil and commodity prices.
Traders in the Government bond market are pricing in a rate rise by June, ending nearly two years of stability, during which time the Bank of England has kept rates at the record low of 0.5 per cent.
An increase in interest rates would not only hit the 30 million credit card users in Britain but also the eight million home owners on variable rate mortgages.
Though the typical household reduced its unsecured borrowing by £500 in 2010, as families tightened their belts and tried to pay down debts, the average household still owes around £8,000 on credit cards and loans.
PWC has calculated that the increase in credit card rates – which have steadily climbed despite the record Bank Rate – would mean families would have to find an extra £1,800 a year just to pay off the interest”.
You can read the whole piece here
Now is a good time think about what you are going to do about your debt, especially, your credit card debit..
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Michael
Senior Mortgage Adviser
