BORROWERS

NEARLY three in five of the 9.2 million households with mortgages are on fixed-rate deals and will not be affected immediately if the base rate rises.

But more than a third – more than three million borrowers – are at risk of a hike in their monthly repayments because they are on variable-rate deals that change with the base rate.

This includes those stuck on their lender’s Standard Variable Rate, the option that should be a last resort as they are the most expensive mortgages with top-whack rates of interest.

Already 88,200 mortgages are in arrears with home owners struggling to keep up repayments.

A 0.25% rate rise, adding £21 to the typical £150,000 loan, would leave 7.2% of borrowers struggling to keep up with repayments.

An eventual rise of 0.5%, over time, would add £46 to monthly repayments, leaving 17.6% struggling to make ends meet.

And a 1% rise, over time, would add a typical £84 a month, increasing the percentage of strugglers to 25.2%.

David Hollingsworth, of London & Country Mortgages, said: “It’s 10 years since we last saw rates go up. Borrowers have become somewhat complacent about rates being low and staying low.

“The good news is that around 90% of our customers have taken out fixed-rate deals, so large numbers are insulated against a rate rise.

“But the environment could be different when they come off those deals. The risk is that currently wage growth is disappointing and higher inflation is feeding into households, so costs are rising.

“A rate increase could see mortgage payments rise on top of that and it’ll only add to the squeeze.”