Interest rate rise 'could prove detrimental' to homeowners and landlords

Posted: 19 Jul 2010 11:14:06 GMT

The financial wellbeing of homeowners and landlords could be pushed over the edge if the Bank of England raises interest rates, one expert has suggested.

Co-owner of the Homeowner Advice Centre Chris Jenkins said interest rates are the foundation to any economic recovery, but he expects a rise of a least one per cent by the end of 2010.

"The survey is particularly worrying for tenants as landlords will be forced to raise rent levels in order to cover their mortgages in the event of interest rate increases," he added.

Furthermore, Mr Jenkins noted this could mean landlords may end up facing repossession and this would then lead to a shortage in rental properties.

According to spareroom.co.uk, 22 per cent of landlords admitted an interest rate rise of just one per cent means the rent currently being demanded would no longer cover the cost of their mortgage.

And ten per cent of respondents revealed a rise of just 0.5 per cent could end up in a rent-mortgage shortfall situation.


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