Britons "unprepared" for rising mortgage rates

Britons are unprepared for rising mortgage rates even though nearly three-quarters would see their monthly repayments rise if the base rate increases.

One in five say they have “no idea” how a rate rise will affect them.

This is a concern with 56% of mortgage holders already struggling financially with their bills.

One in four said they would have real difficulty if their monthly mortgage repayment increased by £99 a month, according to new research from TSB.

The Bank of England base rate has remained fixed at 0.5% for almost seven years during which time more than two million Brits have become new homeowners.

The US Federal Reserve hiked rates in December although the Bank of England is unlikely to follow suit at its monthly meeting today.

Ian Ramsden, director of mortgages at TSB, said was "shocking" to see British homeowners so unprepared and the industry to work hard to explain how a base rate hike would affect them.

"A little bit of planning now can make a big difference in the future.”

TSB recommends homeowners speak to their lender early, draw up a monthly budget and get any existing debt under control. 

It also found that many homeowners would need to make some big changes to meet any increased monthly mortgage repayments.

Some 74% would make spending cutbacks, while 43% would try to remortgage to a cheaper deal.