Base Rate held for longest time since WWII

The Bank of England's Monetary Policy Committee held Base Rate at 0.5 per cent today, marking 19 months of no change - the longest period the Base Rate has remained constant since World War II. But interest rates will have to start rising at some point and a recent poll on moneysupermarket.com found that a quarter of people are worried about the impact this will have on their finances.

Over a quarter of those surveyed (27 per cent) admitted to being worried about an increase in Base Rate affecting their mortgage repayments and clearly this could affect a large number of households. For example, someone sitting on an interest only mortgage of £150,000 on a 2.5 per cent SVR would currently pay £312.50 per month in repayments. Should the Base Rate rise by one per cent, their repayments would jump by £125 per month to £437.50, landing a hefty blow to their finances.

However, if Base Rate rose to 5 per cent - the level it was in October 2008 before it plummeted - the SVR could be 7 per cent and this figure jumps to a staggering £875, over £562.50 extra per month.

Kevin Mountford, head of banking at moneysupermarket.com said: "Low interest rates have been a welcome bonus to many families, with mortgage repayments reduced dramatically, however rates can only go one way, and an increase may cause havoc for families and their finances. As they said in Blitz time Britain, families should ‘make do and mend' and think about their monthly outgoings now, to prepare for the inevitable increase on their mortgage repayments. Anyone sitting on their lenders' SVR should consider fixing now before rates begin to rise."