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  • Experian reveals 1.2 million British middle class 50-55 year olds are to be most impacted by the rise in interest rate
  • 4 million homeowners are on variable rate mortgages
  • Rise in interest rate could cost variable borrowers hundreds of pounds extra per annum 

New insight from Experian has uncovered the impact of the interest rate hike on UK home owners following today’s MPC meeting.

The credit data company reveals middle class 50-55 year olds are most impacted by this rise to 0.5%.

They form a financial group, named ‘Small Savers’ by Experian, which represents 1.2 million of the UK population. Predominantly based in the North West*, they are mature workers with the advantage of home ownership but with nominal savings to sustain their future income. 61% of this group have a variable mortgage and minimal savings to prepare for unexpected rises in monthly outgoings.

Experian estimates that 4 million British households in total have a variable mortgage, with those holding this type of borrowing most stung by a rise in interest rate. The increase means a homeowner on a 2% tracker mortgage of £200,000 outstanding over 20 years, will have their monthly repayment change by £24 from £1012 to £1036, totaling an increase of £288 per annum.

Fixed rate mortgage homeowners, of which there are 4.3 million in the UK, will not be immediately affected and have been enjoying annual savings of £3048 compared to the average standard variable rate mortgage of 4.51%**. But when the time comes to re-mortgage, the interest rate could jump up quite significantly – and with it, the amount of money needed for monthly mortgage payments.

Experian has built a tool to help those with mortgages to see how the impact of the interest rate rise will impact their monthly repayments – available here.

James Jones, from Experian, commented“Perhaps surprisingly, middle class professional people in their early to mid-50s are most likely to be affected by the sting of rising interest rates – due to this group on the whole living for the now, despite being homeowners. 

For home owners who bought only in the last seven years they would have never experienced an interest rate increase. This increase in interest rates means that many will have to navigate the waters of higher mortgage payments for the first time when real wages are falling. 

A priority for homeowners should be to take ownership of their mortgage rates and put in place a few simple tactics to stay on top of their finances. Both budgeting and getting the important insight on your financial position by accessing your credit score can provide some of the easiest ways to ride the change”.

 Tips (from Experian’s James Jones) to remain in control of an interest rate hike as a homeowner:

  1. Use a mortgage calculator to see how a rate rise will impact your finances, before you decide what action to take. It could be beneficial to also speak to a broker to discuss what best mortgage deal you can get.
  1. Check your credit score before you apply for a new mortgage and allow plenty of time to manage and improve it. This could save you money and improve your chances of getting the best deals you’re more eligible for.
  1. Review your spending and make sure you’re planning ahead for both immediate and future interest rises
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