Lloyds TSB’s Consumer Barometer report claims that two thirds of the population expects a rise in the interest rates during the coming year, pushing up the amount of debt they will have to repay each month.
Trevor Williams, chief economist at Lloyds TSB financial markets, said: “This latest survey indicates that households across the UK are bracing themselves for the inevitability that the next rate move will be a rise.”
Last week the Bank of England’s monetary policy committee voted to maintain the interest rate, but for the first time since May 2005, one member called for a rise.
A rise in the rates will mean that those on variable rate mortgages and loans will have to repay more each month, to the extent that many are advised to start saving now to afford this extra debt.
With Lloyds TSB’s report showing that only seven per cent of people expect a decrease in the rates, the majority of Britons cannot say they weren’t warned.
Says ClearDebt chief executive, David Mond: “Britons who believe interest rates are about to rise need to start cutting back spending now.
“Based on the old rule-of-thumb that a repayment mortgage costs a pound per percent per £1,000, people with a £100,000 mortgage could see their monthly mortgage bills rise by £50 – if rates go up by just half a percent.”