Monday, 8 December 2014

500,000 families would struggle if interest rates reached 2.5%

The Bank of England will warn today that a sharp increase in interest rates would penalise the young and favour the old. The Bank will state that an extra 300,000 families would struggle to pay their mortgage if rates rose from 0.5% to 2.5% overnight, bringing the total at risk of falling into arrears to half a million. Typically those aged between 25 and 44 would be hit hardest, since they are more likely to be borrowers. In contrast, older people would likely benefit from an interest rate rise, as they are more likely to be savers.

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