How prepared are British homeowners for a rise in interest rates?

Ben Broadbent is a deputy governor at the Bank of England and one of the nine men and women who meet each month to set interest rates.

In an interview for ITV's Tonight programme he told me the economy is "not ready yet" for a rise in Bank rate but he urged household and companies to prepare for one and "think prudently about how much debt to take on".

Joel Hills talks to Ben Broadbent, Deputy Governor of the Bank of England:

Since Mark Carney's speech at Mansion House in June, the Bank of England has repeatedly signalled that an era of record low interest rates is drawing to a close.

In a sense that prospect should be welcomed as it's a sign that the Bank considers the emergency to be over and the recovery is almost robust enough to withstand a "return to normal".

The only hesitation is that we are in uncharted territory.

The Bank of England has been around for 320 years, interest rates have never been this low for so long, so as and when support for the economy is gradually unwound no one can know for certain what the impact will be.

Over the last few weeks Tonight has been trying to assess the preparedness of households and businesses for when interest rates rise.

Damien Fahy from MoneytotheMasses.com talks to shoppers in York about their borrowing

How prepared are you for a rate rise? Try this mortgage repayment calculator.

Many British households remain highly indebted. One of the most common anxieties we heard from the people we spoke to was that higher interest rates would cause them considerable financial distress.

Research by both the Money Advice Service and Resolution Foundation suggests those fears may be legitimate.

The Resolution Foundation predicts that if Base Rate rises from 0.5% to 3% by 2018 (the path the markets currently expect) the number of households in what it calls "debt peril" (spending more than half their monthly after-tax income servicing debt) would double to 1.1 million.

Ben Broadbent agrees that interest rate rises will cause problems for "a certain number of borrowers" but is clearly of the view that the concern has been overdone.

He points out that the total amount of debt in the economy is actually lower than it was five years ago.

"I would lean against the view I think that any rise in interest rates would cause calamity for a very large number of households. I think that's an exaggeration of where we are at the moment," he told me.

Broadbent doesn't think higher interest rates will lead to a significant rise in the number of repossessions.

"We've gone out of our way to communicate two central things about the likely path of interest rates once they do start to rise.

"First of all, the pace of increase would probably be more gentle than it would in the past.

"And secondly that the point we're likely to get to after this period of rising interest rates, will be materially lower than in the past.

"So the fact is," he says, "we are going to end up in a position where on average mortgage interest rates payments are likely to be much lower than was the case before the crisis."

There are plenty of people in Britain who have managed to hold on to their jobs during the downturn but are feeling much worse off.

Tonight spoke to a couple in Lincolnshire who both work in the public sector and haven't had a pay rise for four years.

Ben Broadbent acknowledges that Britain had suffered an "unprecedented squeeze on living standards" but insisted he saw "some signs" that it was coming to an end.

Last summer the Bank pledged not to start thinking about increasing interest rates until the unemployment rate fell below 7%.

I suggested to Ben Broadbent that the Bank could offer similar guidance on pay - that it would wait until there was firm evidence people were earning more before considering action.

"Pay growth is only one determinant of our ultimate objective which is inflation," he replied.

"There are lots of other things that might affect inflation and I think it would be a mistake therefore to tie our decision to only one thing."

Angela Wardman and Trisha Harrison are two savers, who are concerned with current low interest rates:

One group for whom interest rate rises can't come soon enough are savers.

Investors with money in property or the stock market have done rather well of late but anyone with cash in the bank has had seen their income collapse and the real value of their savings start to fall.

Tonight met one woman in York who was so fed up with watching her savings shrink that she'd more or less emptied her ISAs and spent the money on a mobile home.

Ben Broadbent does not accept that low interest rates are now starting to incentivise unwise behaviour.

"I don't see evidence of that at the moment," he insisted.

"The economy as a whole has never seen debt contract at this pace as we have in the last five years. This is not a debt fuelled recovery".