Mortgage holders are being warned that next year will be when higher interest rates should be expected.  The UK economy has strengthened and with falling inflation, experts believe that a rate change will come in spring. Preparing for higher interest rates should be on the mind of all mortgage holders, say experts. Hopeful home buyers will feel the impact of rising rates as well and therefore as warnings become stronger of an impending increase, a rush to buy is expected.

According to some surveys, homeowners will be facing difficult budgeting issues with even a small increase in the rate.  The Bank of England recently released their own information concerning the impact of higher interest rates and reported that the majority of mortgage holders could cope with increases.

Only 4% of mortgage holders would find themselves in a difficult financial situation with an increase of 2.5%. The data holds into account a 10% increase in household incomes.  If incomes do not rise to this level then there will be more that will find it difficult to meet the demands of their mortgage repayments.

A hike in the interest rate would put many households in the position of having their mortgage repayment at 40% or more of their gross income.  Those that would experience difficulty with their finances due to higher interest rates would rise by a third.

The Bank of England has repeatedly informed that the currently historic low interest rate level of 0.5% will slowly rise and that mortgage holders will be facing slow and steady increases over the next few years as the economy strengthens.