Newspaper article Evening Chronicle (Newcastle, England)

Time to Take Interest in Rate Rise

Newspaper article Evening Chronicle (Newcastle, England)

Time to Take Interest in Rate Rise

Article excerpt

Byline: Michael Brown Reporter

HOMEOWNERS in the North East have been warned they are "in for a shock" over mortgage bills this year.

They have been urged to fix their mortgage interest rates amid continuing confusion and economic uncertainty.

According to new figures almost half of people do not know what the Bank of England base rate is, or that with it expected to rise in 2015 their house payments will go up.

"A lot of people are going to get a shock," said Ben Riley, a director of Newcastle-based broker First Mortgage.

"Traditionally people used to take out mortgages with a rate fixed for two, three or five years, and know that at the end of that period the rate would go up, but for the past few years, with rates going down, a lot of people are sitting on lenders standard variable rates.

"And if the Bank of England base rate rises from its present rate of 0.5%, even if that's only by half a percent, that doesn't mean the public will only see their mortgage payments increase by that. Lenders could review their rates and increase them by 1%, 2% or whatever they want - and they have been waiting for an opportunity to do so.

"If you are on a variable rate mortgage right now I'd encourage you to try and fix the interest rate to a level that you are happy with, before rates rise."

According to a survey compiled by Barclays Mortgages and the Centre for Economics and Business Research more than half of home owners say they are confused over exactly when interest rates are likely to start increasing - with conflicting views from family members and differing statements from politicians and regulators given as the main reasons for it.

The report also found that 46% of people surveyed could not correctly recall the current Bank of England base rate, and half of those with a variable rate mortgage were not sure that their mortgage rate would increase in 2015 or did not expect it to. …

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