Moodys Investors Service has announced there is little chance of UK borrowers running into problems with their mortgage payments if the base rate did rise. Much has been made of the warnings issued by the Bank of England recently suggesting that interest rates will be on the rise very soon. This has led to many people being on alert for potential rises in their own mortgage payments. However the new report from Moodys indicates there is little to worry about. If a base rate increase did indeed come to pass, there is little chance the rate of arrears would increase to any extent. However the report does point to moderate rate rises and not significant ones. This applies more so to those borrowers who are not in any arrears on their mortgages at the moment. Expected rise could see interest rates go up to 1% The general consensus is that the current rate of interest at just 0.5% – could rise to 1% in the coming months. Moodys has assessed that a rise to 1.5% (half a percentage point higher than is expected) would lead to just 1% of borrowers running into problems paying their monthly mortgage. As such very few people would end up struggling if (or more likely when) rates were to rise to 1%. What about further rises? We can expect to see more rises in interest rates happening at one point or another. However those at Moodys suspect far fewer people could run into problems paying their mortgages. If the base rate went up by 3%, according to Moodys, only around 4% of people might end up experiencing problems. It may well be a long time before we see a rise of this nature, which will come as good news for many. Locking into a good deal in the near future will clearly be high up on many peoples lists of things to do. This will help offset the potential danger of seeing interest rates and therefore mortgage payments going up. Thanks to the economic crisis It is thought the events of the economic crisis led many people to take a closer look at their finances. The reality of the economic crisis meant many adjusted their financial situation to free up more cash to ensure the mortgage payments were met. Some people were unable to meet their repayments of course, but many were able to make changes to their situation. This knowledge and experience is thought to have prepared people far more for an increase in interest rates this time around. It could also be said that previous warnings from the Bank of England that proved unfounded have prepared people already which perhaps was the idea anyway. After all we have all heard warnings about a possible increase in interest rates several times now, and nothing has happened. It remains to be seen whether we see a rate increase in the next few months, but whatever happens many people are ready for the outcome.