10m mortgage customers 'could struggle if interest rates rise'

Ten million mortgage customers could see their finances hit if interest rates move back up to 2008 levels, it has been claimed.

Research by PricewaterhouseCoopers PwC found that if rates rise to the levels seen two years ago ten million households will have to pay an average of £1,800 more on their mortgage each year.

In 2008, the average mortgage rate was 6.3 per cent, compared with 4.1 per cent today.

"At some point over the next few years, interest rates will need to rise back to more normal levels if inflation is to be kept under control," commented John Hawksworth, PwC's chief economist.

"There is considerable uncertainty about the timing of future interest rate rises but, as and when they do increase, our analysis shows that the consequent squeeze on household budgets would be significant at around £18 billion a year across the economy as a whole."

This month, the Bank of England's Monetary Policy Committee voted to keep the base interest rate at 0.5 per cent.

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2010-08-12 16:27:23 © Moneyextra.com