Lisa Taylor from Moneyfacts.co.uk said that the extra repayments on loans and mortgages due to a rate change by the Bank of England could cut disposable income by six per cent – £190 per month.
“Recent economic signs do not paint a very rosy picture for UK consumers, with rising bad debts, unemployment levels, unsecured debt levels at an all time high and prediction of a rate increase later in the year,” warned Ms Taylor.
She added that “in the ‘live for today’ society”, there were future costs such as pensions and utility bill rises that people should also budget for.
Her warning comes as the Bank of England prepares to meet next week to discuss the possibility of raising the base rate from 4.5 per cent.
Despite warnings by experts that rates are expected to rise in the next few months, Ms Taylor said that both consumers and even lenders are not being cautious enough.
Without proper planning and action, Ms Taylor fears that people could face financial hardship from rising repayments on loans and credit card debt.