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BoE: Most borrowers could cope with rate rise

The majority of mortgage borrowers could cope with a 2 per cent increase in interest rates, according to a report by the Bank of England.

Research commissioned by the Bank found that assuming incomes rise, only 4 per cent of mortgage borrowers would need to take some kind of action if rates increased by 2 per cent.

However, if incomes remain unchanged, then 37 per cent of borrowers would need to take action if rates went up.

Compared with a year ago, fewer borrowers say they would be affected on both income measures.

The report also found the average borrower would reduce their spending by 0.5 per cent if interest rates rose by 2 per cent.

The Bank says: “Overall, these results do not imply that increases in interest rates from their current historically low level would have unusually large effects on household spending.”

However, the Bank notes the outlook for household income will be a key factor in determining borrowers’ vulnerability to interest rate rises. It says there is a risk that the most vulnerable households will experience lower-than-average income growth as rates rise.


Havard Hughes Peach

Havard Hughes: FCA statutory bodies must come in from the cold

When the dust has settled on the Davis review’s extraordinary critique of the FCA there will be two clear winners. The most obvious one will be the UK’s vital but beleaguered financial services industry. City executives are sick to death of being publicly pilloried, not just by the media and politicians who they expect it […]

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FCA chairman: Wheatley has my full backing

FCA chairman John Griffith-Jones has backed chief executive Martin Wheatley following a damning report into how the FCA handled its closed book review announcement. Griffith-Jones says he and the board have “total confidence” in Wheatley. Clifford Chance partner Simon Davis has been carrying out an independent inquiry into how the regulator announced its closed book […]


F&TRC adds trail switch-off tool

Financial and Technology Research Centre has added information on when various providers will switch off trail commission to its Quality Analyser tool. The tool, which is free to advisers, will now feature a “commission disturbance matrix”. This will allow advisers to compare the approaches of different providers to switching off trail commission. It gives details […]

Leading Edge – April 2017

There is little doubt 2017 will be a year of political uncertainty. Leading Edge is Royal London Asset Management’s regular review of investment markets. This edition explores some of the impacts that this uncertainty is having on investors, from the pitfalls of prediction within UK equity investing to the dangers of opting for convenience over […]


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