Grantham-based debt advice provider PayPlan has launched an interest rate calculator following today’s announcement that the Bank of England will be increasing interest rates.
The official bank rate has been lifted from 0.25% to 0.5%, the first increase since July 2007, sending mortgage bills higher for millions of families.
A rise in interest rates could have a catastrophic impact on homeowners who are already living on a tight budget, according to figures from PayPlan, who have launched an interest rate calculator to help clients work out how a rise may affect their monthly mortgage payments.
A recent national survey that conducted revealed that 72 per cent of homeowners would not be able to cope with a £100 monthly rise in their mortgage repayments, and 65 per cent believe an interest rate rise would have a ‘severe’ impact on their finances.
Despite 90 per cent of people not planning ahead by speaking to their lenders, 94 per cent are actively worried about how interest rates will impact on their budget, and if there was a rise, over half (54 per cent) would be forced to cut down on their most basic of expenses, including food and heating.
PayPlan money advisor Jane Clack, who has been in debt herself, knows how difficult it can be.
She said: “Having the security of a roof over your head is a primary expense for almost everyone. What is concerning is that for those who are experiencing money problems already, that additional rise in interest rates could tip thousands of people over the edge, meaning they’d have to cut down on real essentials.
“Planning ahead is absolutely crucial, so seeking out professional advice is the best way to anticipate how external changes, such as interest rates, would affect your monthly spending.”
To find out how an increase in interests rates may affect your monthly outgoings, visit PayPlan’s Out of Interest calculator: https://www.payplan.com/out_of_interest/