Borrowers Ignorant Of Low Loan Rates
The Bank of England announced yesterday that the base rate of interest for loans and savings was to remain at its historically low level of just 0.5 per cent for another month, making a total of two years of cheap loans in the UK.
But a new survey has found that borrowers living in the UK who have outstanding variable rate home owner loans and mortgages seem to be unaware of just how cheap their home owner loan is at the moment.
The research, which was conducted by the housing and homeless charity Shelter, found that somewhere in the region of one in four borrowers were completely ignorant of the fact that their loan was currently at an all time low interest rate and had no idea what effect an increase in rates would have on their loan repayments.
Of this 25 per cent of borrowers, around 9 per cent of these are of the belief that the cost of their home owner loan is higher than it has been for some considerable time, according to the research.
The current average interest rate on a home owner loan or mortgage was 3.50 per cent in January this year, however the average rate over the last ten years is 5.15 per cent and with many borrowers already struggling to maintain the repayments on their loan, Shelter are concerned that any interest rate rise could have a disastrous effect for some borrowers.
Campbell Robb of Shelter said “It is frightening to think so many home owners are completely unaware that interest rates are at a record low. This research makes us extremely concerned that millions will be financially unprepared when interest rates do go up and won’t have plans to manage increased costs.”
