If Bank of England raises the interest rate again this week – as widely expected – the impact could be devastating with nearly three in four people already feeling the pressure to keep up with mortgage payments.
This is the conclusion from the latest Saltus Wealth Index report of 1,000 people across the UK.
Partner at Saltus Mike Stimpson points out that as speculation grows around the Bank of England’s twelfth consecutive interest rate rise this week, swap rates are increasing and consequently many lenders hiking up mortgage rates in preparation.
The findings also show that nearly 50% of respondents expect interest rate increases to place a strain on cashflow and over 25% are already feeling the impact. High-Net-Worths (those with over £250,000 of investable assets) have also not been immune from pressures as 84% are expecting, or are already experiencing, increased strains due to rising interest rates.
“Interest rate markets are assigning a probability of over 80%, for a 25bps hike, which would be in line with what the US Federal Reserve pushed through at the start of this month,” Stimpson says.
“A further increase in rates will see people continuing to face even greater pressure managing their personal finances and mortgage repayments with more people expected to tap into their pension savings to try and cover the shortfall – creating a longer-term problem for many people”.
He adds: “A small silver lining is that it looks like the rate rise may slow and even start to level out over the coming months helping ease some pressures later in 2023.”
