Rate rise jitters

Interest rate movements are a serious concern for many each month, with 41% claiming they feel ‘worried’ or ‘extremely worried’ in anticipation of the Bank of England’s decision, according to ICM research commissioned by Intelligent Finance.

Holistic finances key to worry free rates

The Bank of England has raised interest rates five times in the last 12 months, and commentators suggest further increases are likely in the coming months. Yet only a quarter (26%) of people surveyed said they held products that are protected from rate changes.

Offset mortgages can shield consumers from the negative impact of rate rises. Rather than receiving interest on savings, none is paid on the equivalent amount of the mortgage, resulting in an ‘effective rate’ on savings of 9% for standard rate taxpayers or 11% for higher rate taxpayers. And what's more, because borrowers don't receive interest on their current account or savings when offsetting there's no tax to pay on the amount being offset.

Mark Parker, Managing Director, Intelligent Finance said: “With interest rates on the rise and purse strings tightening, it’s important to make every penny work as hard as possible. Offset mortgages give peace of mind, negating the effects of a rate hike and giving the flexibility to lower monthly payments. This is good news whether you’re a worrier or not!”

Younger most vulnerable

Four in ten 18-24 year olds get worried about the impact of a rate change and a further 10% get ‘extremely worried’ at the prospect of a rate rise, but only 7% have products to protect themselves from rate changes.

Women worriers?

Fewer than a quarter of women claimed to take no notice of upcoming rate-changes, compared to a more relaxed 38% of men, and twice as many women than men claimed to get ‘extremely worried’ (14%). Interestingly, when it comes to protecting themselves from rate rises, almost a third of women have been precautious in their choice of products, compared with only a fifth of men.