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