| The Bank of England has already made | | | | interest points higher, at a time when |
| four quarter-point interest-rate rises | | | | disposable incomes are falling and the |
| since August 2006, leaving many | | | | saving rate has been squeezed to its |
| homeowners hoping that fears of further | | | | lowest in nearly 50 years. |
| rises this year would prove unfounded. | | | | Nor are those on fixed rate deals |
| After all, last month the nine-member | | | | necessarily protected from the impact of |
| Monetary Policy Committee (MPC) voted by | | | | the 5.75% interest rate. If you, like |
| a small majority to freeze interest | | | | many hundreds of thousands of others in |
| rates at 5.5%. This week, however, the | | | | the UK, secured a two-year fixed rate |
| more monetarily aggressive members of | | | | mortgage in the summer of 2005, taking |
| the Committee pushed the vote the other | | | | advantage of the then low interest |
| way, with interest rates now rising to | | | | rates, you may now be facing the shock |
| an eye-watering 5.75%. Even worse, many | | | | of dramatic payment increases, as your |
| business analysts are predicting a | | | | fixed rate comes to an end and you are |
| further rise to 6% before the end of | | | | forced onto your lender's standard |
| 2007. | | | | variable rate (SVR). |
| For the average homeowner with, say, a | | | | So is this all a tale of doom and gloom? |
| £100,000 mortgage, each quarter-point | | | | Well, it's certainly an uneasy time for |
| rise in interest rates equates to an | | | | first-time buyers and existing |
| additional £16 a month, on average. | | | | homeowners but there are still plenty of |
| That means that, over the past year, | | | | options in the market to ensure you get |
| borrowers had already seen mortgage | | | | the best possible mortgage deal, despite |
| payments rise by around £64; with this | | | | the uncertainties. The most important |
| latest rise, total payment increases | | | | thing is that you understand where the |
| will be nearing the £100 mark. And for | | | | market is and where it is heading, and |
| those with larger mortgages, the | | | | that you have contingency plans for |
| financial impact may be far worse. | | | | possible interest-rate rises in the |
| The last time we faced such interest | | | | future. If you are a first-time buyer or |
| rates was in 2001, but the difference | | | | you are looking to change mortgage, be |
| today is that our debts are generally | | | | sure to get the right advice to ensure |
| far higher. Consumer spend has become | | | | you do not over-commit your finances. |
| the mainstay of the British economy, to | | | | Using a comprehensive search service |
| the detriment of the manufacturing | | | | such as could also help you quickly and |
| industry, which has instead withered. | | | | efficiently research available deals in |
| The process has worked because we buy | | | | the market, ensuring that you get the |
| homes at cheap interest rates, then gear | | | | right mortgage for your individual |
| up against those homes to carry on | | | | circumstances. |
| spending. The result is that the country | | | | Most of all, do not let any concerns you |
| is now running on the highest level of | | | | might have over possible future |
| debt ever. | | | | interest-rate rises force you into |
| In particular, favourable interest rates | | | | making hasty decisions or panic buys. |
| in recent years have encouraged many | | | | Take the time to think through your |
| thousands of people to take out second | | | | options and balance up not only your |
| mortgages, perhaps to reduce unsecured | | | | finances with the mortgage deals on |
| debt, pay for home improvements or help | | | | offer, but also consider carefully your |
| with the costs of looking after a | | | | lifestyle preferences and what financial |
| family. If you are one of the many with | | | | security you need to live comfortably |
| a second mortgage, this latest Bank of | | | | and stress-free. Take time out now to |
| England interest-rate rise will be | | | | consider the market challenges and |
| doubly painful. In addition, if you are | | | | opportunities, and you will reap the |
| looking for new mortgage deals, you | | | | rewards in future of both financial and |
| might face paying out as much as two | | | | personal well-being. |