Homeowners 'must prepare for interest rate rise'

Homeowners must prepare now for an inevitable interest rate rise, the Money Advice Trust has warned.

One in 14 (7%) people said that they would be in serious financial trouble if mortgage rates and repayments changed as they expect over the next three years, while a further one in five (20%) said this would cause them slight financial problems.

Around 39% of those surveyed said they will be forced to cut spending on holidays and eating out to cope with rate rises, while one-fifth plan to reduce spending on essentials such as clothing and food.

Joanna Elson, chief executive of the Money Advice Trust, said: "After all these years, mortgage-payers are in for a big financial shock when interest rates begin to rise. For many, that shock will be too much to absorb - and there is a real risk that we will see a surge in unmanageable debt problems as a result.

"Our message to borrowers is clear - interest rates will rise and that day is coming soon, so now is the time to prepare. Draw up a budget, speak to your lender, and if you do find yourself struggling to repay, seek free debt advice as early as possible."