Interest rates 'confuse homeowners'

A recent survey has shown that the impact of interest rates is a mystery to many homeowners.

When asked what effect a 0.5 per cent interest rate rise would have on the monthly payments on a £100,000 interest only mortgage, 70 per cent of respondents answered wrongly.

The survey, which was carried out by CreditExpert.co.uk, also found that 80 per cent of respondents did not know what the annual percentage rate meant.

Jim Hodgkins, managing director of CreditExpert.co.uk, stated: "Although the current Personal Credit Index shows that people generally are more confident than in the last quarter, the lack of understanding of key terms and the effect of interest rate changes is worrying."

In related news, the Press Association has reported that many experts are forecasting a double interest rate cut by May. This is a reversal from views over the summer, when many were predicting another rise.

Currently the base rate of interest is 5.75 per cent.

Currently the base interest rate stands at 5.75 per cent, after the monetary policy committee of the Bank of England decided not to raise it earlier this month.

Related Articles