People and families are warned that the real threat to their savings isn’t stock market volatility this week. The volatility of the stock market this month is creating serious concerns among people, with global indexes tumbling. Corrections on the likes of Dow Jones has seen them fall by over 1,000 points, with European indexes following suit.
Uncertainty on the market shouldn’t concern the average saver, however, but rising interest rates will cause problems. According to The Telegraph, personal wealth and savings are threatened by Interest hitting rates. This rise is especially true when it comes to the mortgage market which rises alongside interest.
Mortgage rises – A threat to personal Savings
The Bank of England’s recent diagnosis of the British economy has opened it up to calls for interest rate increases. While the rate remains static for now, 2018 is sure to see numerous additions to the 0.5% rate. Since September 2017, the level of borrowing for mortgages rose by over 14%, totalling £69.6bn by December.
For many families, multiples increases to interest rate threaten the finances of millions due to increased borrowing. When interest rates rise, any borrowing incurred by an individual/family, repayments increase in line with interest. According to The Independent, households are already seated in financial gloom this January, and likely to continue.
According to the IHS Markitt’s Household Finance Index, Households hit a record low in their financial wellbeing. And with proposals for a plural approach to interest rate increases, this well-being is set to get worse.