Mortgage confusion to result in debt worries?

People may be placing themselves at risk of falling into debt by not keeping on top of their mortgage details, new statistics have suggested.

Research published by the Consumer Financial Educational Body (CFEB) revealed 74 per cent – almost three-quarters – of mortgage holders do not know the effect an interest rate rise of one percentage point could have on their monthly outgoings.

The study discovered 51 per cent of home-loan owners think their interest rates will alter within the next nine months.

However, 14 per cent admitted they are unsure of the type of rate – be it a fixed, standard variable, tracker or discounted rate – they are currently paying.

If their mortgage payments were to rise by £200 per month, 14 per cent of mortgage holders – which equates to around two million homeowners – stated they do not know what they would cut back on.

More than half of them (54 per cent) claimed to have no plans in place to review their home-loan situation or said they will leave it until the very last minute before implementing them.

Around 1.3 million mortgage holders with a deal in place revealed they are not aware of when it will expire.

Tony Hobman, chief executive of the CFEB, said of the possibility of rising interest rates: “It is clear from our research that many people with mortgages haven’t thought about what it would mean for their monthly payments.”

Recent research carried out by Moneyfacts.co.uk discovered the cost of a fixed-rate mortgage had dropped to 4.53 per cent – the lowest it has stood since September 2003.

By Joe Shervin