Bricks and mortar – such a simple premise, but the cause of many an anxiety. Now it seems that families are facing a rise of £200 a month after the UK’s leading business organisation warned of a hike in interest rates.
The CBI’s latest economic forecast has predicted that rates will have to rise to control inflation, thus adding thousands of pounds a year to mortgage bills for millions of households.
Most home loans currently come with an interest rate of 4.5%, but that could rise to 5.25% by the end of next year and 6.75% by the end of 2012 if the forecasts are correct.
Ray Boulger, of mortgage adviser John Charcol, said: 'Those who will be hardest hit are those whose finances are already on a knife-edge because they have either lost their job, suffered a loss of income or borrowed too much.
'Most will be able to cope but they should think about paying back other debts and cutting their spending to prepare for rates going up.'