Seven out of ten 'confused over interest rates'

Posted: 24 Oct 2007 09:28:12 GMT

Concerns have been raised over the number of homeowners who are stumped when it comes to knowing about interest rates.

Concerns have been raised over the number of homeowners who are stumped when it comes to knowing about interest rates.

According to a new survey by CreditExpert.co.uk, seven out of ten people who currently has a mortgage does not understand how their repayments will be affected should rates go up or down.

The alarming research also found that eight out of ten of those questioned did not know the meaning of the term 'APR' or annual percentage rate.

Around half believed that this was the same as the interest rate, while 15 per cent thought it was the amount which needed to be paid back on a loan throughout the year.

Jim Hodgkins, managing director of CreditExpert.co.uk, said: "Although the current Personal Credit Index shows that people generally are more confident than in the last quarter, the lack of understanding of key terms and the effect of interest rate changes is worrying."

Meanwhile, economists Barclays Capital have predicted that there will be a double interest rate cut before May next year which will take rates down to 5.25 per cent.

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