24-10-2007
Impact of interest rate rises misunderstood
News by Adfero for Simply Business - independent providers of business insurance, business finance, landlord insurance, buy-to-let mortgages & commercial mortgages.
A majority of Britain's mortgage holders do not properly understand the consequences of interest rate increases, it has been claimed.
According to data released by CreditExpert's Personal Credit Index survey, 70 per cent of Britain's mortgage holders would not fully realise what the effects would be of a 0.5 per cent rate rise on monthly mortgage payments.
"Although the current [index] shows that people are generally more confident than in the last quarter, the lack of understanding of key terms and the effect of interest rate changes is worrying," said Jim Hodgkins, managing director of CreditExpert.
"It's important for people to be familiar with standard financial terms and stay on top of changes," he added.
Indeed, the survey also observed that a majority of mortgage holders (77 per cent) admitted to not knowing what was meant by annual percentage rate.
On an interest-only mortgage of £100,000, an interest rate increase of 0.5 per cent would generate a monthly mortgage payment increase of £40.
Thinking of re-mortgaging your buy-to-let? Get a choice of rates from Simply Business.
Landlord insurance quotes are also available