Next rate rise could force homeowners to remortgage

07 May 2007
A quarter of the UK's mortgage holders could be forced to remortgage their homes if interest rates rise as predicted in May, a study from has found.

Just one in eight people has had the spare funds and foresight to protect themselves against a possible rate rise next month, the research showed.

If the impact of interest rates forced their repayments up by £50 per month, 2.6 million Britons would have to remortgage their homes.

The most at-risk homeowners are those signed up to an interest-only tracker mortgage deal, stressed's head of insurance, Louise Cuming.

Members of this group stand to pay £62.50 extra each month with every half per cent rise in the interest rate, she said.

Before the Bank of England base rate decision, scheduled for May 10th, homeowners should start thinking about switching to a mortgage package that dulls the impact of interest rates, she suggested.

But improved awareness of the impact of base rates on mortgage repayments should be the longer-term goal, Ms Cuming implied, helping homeowners budget better in future.

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