Rate rise could tip those close to edge over it

The Observer - - BUSINESS -

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.

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