Debt fear of potential interest rise

Interest rates look set to rise sometime this year, according to an expert, providing more debt reasons for many.

Jon Moulton, chairman of Finncap, reckons there is a one in three chance of interest rates rising before the end of the year due to the debt levels that Britain and many other countries are running at.

This would come before the Bank of England's projection of rising from 0.5 per cent at the end of the year to 2 per cent by the end of 2011.

Homeowners too would be most affected by any rise in interest rates as their mortgage repayments would go up significantly, if they are on a tracker deal.

Kevin Still, director of Atlantic Financial Management, says: "Many homeowners have been dreading the day that their mortgage payments go up and it will probably go up as other government debt reduction measures begin to bite.

R3 have already warned of a rise in personal insolvencies, but at Atlantic Financial Management we feel that this will be the tip of iceberg with many homeowners needing transitional debt solutions when disposable income reduces to a level where contractual payments on credit cards debts and other borrowing cannot be met."

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