Shock Rate Rise To Hit UK Borrowers Hard
Already overburden in debt, UK loan and credit card borrower will be left wondering what effect the Bank of England’s announced quarter-point rise in the interest rate, to 4.75%, will have on their already tight monthly budget expenditure. More painful, however, will be the fact that many analysts did not see the latest rise in the interest rate by the Bank’s Monetary Policy Committee coming.
With some analysts, however, predicating that the number of personal insolvencies to be filed by UK borrowers this year exceed 100,000 for the first time since the change in the law two years ago, what is certain is that many UK loan and credit card debtors will now be finding themselves stuck between a rock and hard place – while many are finding it already extremely difficult to repay their outstanding loan and credit card debts, their woes have now increased with an unexpected and shock rise in the interest rate.
While most UK retail banks have held off making any immediate announcement on whether or not they will follow the Bank of England’s lead in increasing their interest rates, the rise in the interest rate will have an almost immediate effect on home loan borrowers. With the average house in the UK now exceeding £150,000 for the first time, any home loan borrower with a home mortgage loan in the region of £120,000 can expect to see their home loan repayments increase by around £18 a month.
As most UK borrowers are already struggling to cut costs in order to meet their debt repayment obligations, this shock rise in the interest rate could not really have come at a worse time, with many having just returned from a credit card expensed summer holiday.
What many UK banks and lenders may be reading into this latest rise in interest rates is a significant increase in an already out of control level of delinquent debtors looking to obtain some form of loan and debt credit counseling. Consequently, hopefully many UK lenders will feel that now is not the right time to follow the Bank of England’s lead and increase interest rates. Having said that, UK lenders have not been known for their civic spirit in the past and so it is difficult to see them holding back on this for long.
If you’re a UK loan or credit card borrower, on an already tight budget margin, now would be a very good time to start looking around at all those special offers currently on offer so that you can have a chance at looking to restructure your UK loan and credit card debts before the full impact of this surprising increase in the UK interest rate can filter its way down to the ordinary person on the street.
4th August 2006