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.