Survey shows widespread ignorance about interest rates

The results of a new survey show widespread ignorance about how interest rates work and about how the Bank of England’s monetary policy committee can affect household finances.

Research by specialist property lending firm Octane Capital questioned over 1,000 mortgaged property owners and found 18 per cent weren’t familiar with how the base rate may impact the monthly cost of their mortgage, with a further 37 per cent ‘somewhat familiar.’ 

Yet 59 per cent of those surveyed stated that they had already seen the cost of their mortgage increase over the last 18 months since the first interest rate hike was implemented in December 2021. 

For 21 per cent, this caused increased financial stress and anxiety, with six per cent forced to reconsider or delay plans to improve their home. 

No surprise then, that 56 per cent of those surveyed stated they were either very or somewhat concerned about the potential of a future increase in the cost of their mortgage ahead of tomorrow’s base rate decision by the Bank of England’s monetary policy committee.

When asked about the biggest challenges a mortgage cost increase would pose, 37 per cent stated it would be the financial strain on other areas of life such as bills and expenses, while for 31 per cent the ability to afford their monthly mortgage payment was also a worry. 

Some 61 per cent would like to see more help offered to homeowners from the government or financial institutions when it comes to dealing with the increased cost of borrowing. 

Octane chief executive Jonathan Samuels says: “All eyes will be on the Bank of England again this week and homeowners and buyers across the nation will be hoping it's not a case of unlucky number 13 when it comes to a potential increase to interest rates. 

“For those who face the potential of higher monthly mortgage repayments it’s understandably a worry and many existing homeowners have already seen their household finances stretched over the last 18 months due to increasing mortgage rates.”