How will a rise in interest rates affect tenants?

If you’ve been following the news recently you might have seen that it’s very likely interest rates will rise soon. This means that some homeowners will see their mortgage payments go up, if they’re on a variable rate mortgage.

But will this affect you if you rent and you’re on a DMP? Let’s look into this in a bit more detail.

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Will the rise affect me if I’m not a homeowner?

If you’re not a homeowner, the rise in interest rates is unlikely to have any immediate effect on you. In general, the Bank of England base rate doesn’t affect the interest you pay on unsecured credit like credit cards, personal loans or store cards.

Will my DMP payments go up?

No – your DMP payments are based on what you can afford to put towards your debts, not the interest rates charged by the lenders included in your DMP. In fact most lenders agree to freeze further interest and charges if you are on a DMP – although this isn’t guaranteed.

Is it good for the future?

If you’re nearing the end of your DMP and you want to build up some savings once it’s over, the rise could be a positive thing for you. When you stop paying towards your DMP, that money will be yours to do with as you wish and we know that many of you have plans to save up. So this rise in interest will make saving for the future an even more attractive prospect.

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