Abacus Daily Debt News

Interest rate rises ‘could cause debt panic’

Any increases to interest rates could result in a number of people slipping towards debt, it has been suggested.

Chris Jenkins, co-owner of the Homeowners Advice Centre, warned individuals may be forced "over the edge of their financial wellbeing" if such hikes were to take place.

The specialist was speaking in response to a report from Spareroom.co.uk, which revealed any escalation would render 22 per cent of landlords’ mortgages insufficiently covered by rents.

Mr Jenkins explained the situation is "particularly worrying" for tenants because costs may be raised by property lenders in an attempt to cover their bills.

Some people may even be forced to leave their home if it was subsequently repossessed, he added - meaning a shortage of rental properties in the market could follow.

The Spareroom.co.uk study discovered 41 per cent of landlords report rent from their tenants only just covers the monthly mortgage repayments on their properties.

By Joe Shervin