The Bank of England’s Monetary Policy Committee (MPC) is due to meet later today (Thursday 9th September) to discuss the base rate of interest for loans and savings for the coming month and many people with home owner loans are waiting nervously for the decision.

A large proportion of home owners with a loan secured on their property are on a variable rate loan deal with their lender and have got used to having a cheap loan over the course of the past eighteen months, due to the particularly low Base rate of interest.

But if the MPC decide to increase interest rates later today, it could place great financial pressure on many home owners who are already struggling to stay on top of their home owner loan and personal loan repayments, according to one independent financial adviser firm.

Riach Independent Financial Advisers has warned that due to the fact that many borrowers are currently on a tracker rate loan, even a slight increase in rates could have a huge impact on household expenses.

Opinion is divided amongst industry experts, but many believe that the base rate could increase to 1 per cent by the end of this year, with some even suggesting that rates could rise as high as 8 per cent within the next two years. A rate rise of just 1 per cent could increase the interest repayments on a typical loan of £150,000 by £125 per month.

 Bob Riach said “If rates go up and income does not, some people are going to be under pressure. Very low borrowing rates have helped to cushion some customers from the effects of the recession. “

“The base rate has been at an all time low of just 0.5 per cent since March 2009 and this has given many homeowners financial relief when it comes to their repayments. However, increases in the base rate could reverse this situation, leaving many people struggling to make repayments again.”