Thu 09 Oct 2014
Almost half of all UK mortgage holders are unaware of their current mortgage rate and over a third are surprised to learn that if the base rate rises by just 1%, it could add £91 to the average UK variable mortgage payment.
The figures, from research conducted by the Keep Me Posted campaign, suggests that many home owners with a mortgage don’t know enough about their finances.
Overall 42% don’t know what the current rate is, 31% think they will have to make sacrifices if the interest rate rises 1% and 11% would get into financial difficulty.
The research also found that when asked how they would like to be notified of a change to their mortgage rate, 67% preferred a printed letter, rising to 77% of those aged over 55. This is compared to just 22% who would like an e-mail and 5% who would like a text.
Furthermore, 65% of mortgage holders admitted that a printed letter would make them most likely to take action including shopping around for a better deal compared to just 23% for e-mail and 5% for text.
When asked how a base rate rise would affect them, 31% of mortgage holders polled believed that a rise of 1% would not be affordable. Of these, 20% state that they would have to make significant sacrifices to afford their mortgage, and 11% think it would tip them into financial difficulties. A further 42% claimed they could afford it but they would find themselves financially stretched by this change.
‘There’s no doubt that at present, a large number of people stand to be affected significantly if the base rate rises, meaning many may be left struggling to afford their monthly mortgage payments,’ said Judith Donovan, chair of the Keep Me Posted campaign.
‘What was particularly shocking to us was the number of people that currently aren’t aware of their mortgage rate. It is also clear from our research that home owners are more likely to react to any changes if notified via a posted letter. Companies should be aware that digital channels may not be suitable for all their customers and should be careful not to take a one size fits all approach,’ she added.
Keep Me Posted champions communications choice for everyone in society. The campaign believes that when it comes to important financial information, consumers should be communicated with in a manner more likely to encourage them to take the best action for them. More importantly, consumers should be able to choose how they are communicated with by their service providers. The campaign believes legislative and regulatory action needs to be taken before this becomes a serious issue.
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