Homeowners are set to for a wake-up call this week as the Bank of England look likely to increase interest rates for the first time in ten years.
Currently set at 0.25pc experts say that this is likely to be increased to 0.5pc – a small amount but enough to have a significant impact on people with large mortgages.
On Thursday the Bank of England will reveal if they are going to start to hike interest rates up this week and then slowly continue to slowly rise rates.
If we take a mortgage of £125,000 the rise in interest would see some ones repayments increase by £204 per year, while a larger mortgage of £300,000 would result in around annual increase of £444 per year.
While savers may be welcoming the news, the reality is that such a small increase will make little difference to the money they earn by leaving it with the bank.
Interest rates have been ‘unnaturally low’ for many years now but these low rates mean people have been borrowing money and giving on credit as it has been affordable to do so.
While what looks like a certain increase seems small there is plenty of concern that many families could find themselves in real difficulties.
Some financial experts are predicting this to be the first of sequence of hikes in interest rates as the Bank of England look to control the economy and reduce spending.
In 1989 rates soared to 14.8pc in a year that saw the housing market collapse, people lose their jobs and thousands of homes being repossessed.
Once the Bank of England make their final decision on Thursday, people will still have time to switch their products to ensure they are protected against future increases.
With around 43pc of the mortgages in the UK set to be effected by this increase this could be a very worrying Christmas for families throughout the UK.
With some industry experts saying rates could go back to a more realistic 3pc or 5pc, then the average increase to home owners on their monthly repayments will be £260 and £474 per month just to keep a roof over their head.
