Rate rise could tip those close to edge over it
Britain’s simmering debt crisis is to come under the scrutiny of MPs this week when the first submissions in the Treasury select committee’s inquiry into household finances are heard.
The spiralling levels of debt in the UK have caused no small amount of concern among charities. The amount of debt built up on personal and car loans and credit cards is now at levels similar to those just before the 2008 financial crash. Committee chair Nicky Morgan has said they will examine policies aimed at helping households achieve the right levels of savings and look at how sustainable current levels of debt and consumer credit are.
Debt charity StepChange, which has long been highlighting the growing crisis, estimates that almost 3 million people are in severe financial difficulty and 9 million are close to the edge. There are also fears that the recent increase in interest rates – from 0.25% to 0.5% – will further increase pressure on households already on the edge. It is estimated that the base rate change could put an additional £1.8bn on interest payments for those on variable rate mortgages.