Are you feeling the pain yet?

I don't know about you, but I am definitely feeling the impact of the recent interest rate rises. While not suprised, I did groan when I heard that the Bank of England had voted to pass on another quarter point increase last Thursday - the fifth since last August. That means another £49 on my monthly mortgage payments. On its own, that doesn't seem too bad but my husband and I are now paying around £240 a month more than we were this time 12 months ago, which is nearly £3,000 a year. Add to that the increases in other bills that we've had (the most recent being from Powergen which wants to double our monthly direct debit for our gas and electricity) and the fact that the weekly food bill is definitely creeping upwards, and things are getting tighter.

Fortunately, we can cover these increases and aren't in any danger of defaulting on our mortgage payments, although I don't think I'll be extending my wardrobe or shoe collection for a while. However, many people are not so lucky and it is not only those on below-average incomes. Debt charities are reporting an increase in the number of middle-class families who are in difficulty as the proportion of take home pay going on housing costs has increased from 33% to 44%.

Those most at risk are people who have taken on huge mortgages in order to get on or move up the property ladder, but thousands of households with average-sized home loans are also struggling as they try to juggle the costs of family life.

How are the rate rises affecting you? Have you had to pull in the purse strings, or have you so far been protected because you are on a fixed rate mortgage?

And how do you feel about the prospect of further rate rises? Around 60% of economists believe rates will hit 6% before the end of the year, and some think they could go even higher. Do you think more interest rate increases are necessary or do you think there could be distastrous consequences if the Bank of England decides to rase Bank rate again? Let us know your views.

Comments

[Michelle]

The IR rises are benefiting me, I earn more on my savings and I will be able to buy a better annuity when I retire.
I responsibly decided not to overstretch my finances and buy a house I could not afford, and also not to rely on the smoke and mirrors of these economy pundits who claim that low interest rates are forever.
I feel sorry that you and others have made unwise financial decisions, but I have to mind my interests and I hope that rates go to 8%.

[Tomo]

With oil brushing $80, corn price doubling in 18 months, energy prices booming, and accomodation costs soaring, the BOE has already allowed our economy to overheat by being too accomodative. In order to reign it in, monetary tightenning is the only option. The interest rate "norm" should be around 3% more than retail price inflation (currently 4.3%), so interest rates will not have peaked yet. And nor should they. The BOE has allowed the economy to artifially boom, but the real winners are the city bosses, at the expense of everyone else. Any loosenning from here on in will be done only in extreme circumstances in an attempt to stave off recession. We will see higher rates and we all will have to learn the hard way that the trends will always revert back to the mean.

[Steve Gibbons]

Interest rate rises; fuel cost increases; domestic bills almost doubled;£30 late payment fees- what was the consequence for me? Well it quickly forced me into serious debt which I am adressing. I am a typical middle class,middle aged family man in the higher ranks of my profession having served 25 years and thought I was in control of my finances until the last year or so. I have made mistakes with credit cards and was , on reflection extremely gullible to banking products offered during personal review meetings ie worthless endowments, Critical illness and loans.Be cautious of these meetings!!
On facing up to my debts the reaction of my creditors has been mixed but generally very positive there seems to be an understanding of the despair people are facing due to current economic situation. What worries me is the terrible circumstances of many families much worse off than my own.

[Ebiaraore]

the worst is yet to come to all those who refused to understand that
expenses > income = debt + tears

it will all end in tears!