Debt management 'could be more difficult with higher interest rates'

A rise in interest rates could harm people's debt management efforts, as one expert has claimed such a move could push individuals "over the edge of their financial wellbeing."

Chris Jenkins, co-owner of Homeowners Advice Centre, said that if the Monetary Policy Committee were to decide to lift the base rate, it could have a negative impact on those who own their own house as well as landlords and tenants.

"I firmly believe that low interest rates need to be treated as the foundation to any economic recovery in the UK," he commented.

However, the expert predicted that they would be increased to at least one per cent by the end of the year, in an attempt to tackle the possibility of inflationary pressure caused by the hike in VAT planned for the beginning of 2011.

Responding to the results of a report by Spareroom.co.uk, which stated that a rise in the base rate could see 22 per cent of landlords taking insufficient rent to cover their mortgage repayments, Mr Jenkins said that many tenants could be negatively affected.

The average amount that people pay when leasing a property could increase, while individuals could be evicted from a house they are loaning should it be repossessed.

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