24 Oct

Brits 'lack understanding of interest rates'

Brits 'lack understanding of interest rates'

The overwhelming majority of Britons do not fully comprehend the impact rising interest rates have on their mortgage payments, a new study has revealed.

According to a survey of 1,700 adults conducted by personal finance website CreditExpert.co.uk, seven out ten of those polled did not know what kind of effect a rise of 0.5 per cent would have on a £100,000 mortgage.

Of those who answered incorrectly, nearly one in five (19 per cent) said that the rise would see repayments rise by double the true figure.

Meanwhile, 17 per cent thought the rise would barely impact on their repayments.

The survey also showed that four out of five respondents did not know what is meant by the term annual percentage rate.

Jim Hodgkins, managing director of CreditExpert.co.uk, said: "The lack of understanding of key terms and the effect of interest rate changes is worrying.

"It's important for people to be familiar with standard financial terms and stay on top of changes that affect their personal finances so they can make the best possible decisions and choices."

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