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  1. ITV Report

What does an interest rate rise mean for borrowers?

The Bank of England is expected to raise interest rates by 0.25% on Thursday, the first time they have gone up in more than a decade.

While the increase is good news for those with savings, it is bad news for those with mortgages or other money borrowed.

With the economy in a sluggish state and households feeling their finances squeezed due to rising costs, the Bank hopes that a small increase in interest rates could curb inflation and strengthen sterling.

If the widely expected rise does take place on Thursday, it remains unclear whether it could be a short, sharp shock, or a sign of things to come.

However, the Chief Executive of Leeds Building Society does not predict any "significant rate rises" for around a year.

The Chief Executive of Leeds Building Society does not predict any 'significant rate rises' for a year. Credit: ITV News

"At the moment, I think the market is probably reading this as being after a rise in November, unlikely to see any significant rate rises until the back end of 2018," Peter Hill explained.

If interest rates do rise on Thursday, it will be the first time they have done since 2007.

A base rate rise of 0.25%, would add around £144 per year to every £100,000 borrowed as part of an average mortgage.

A 0.25% rise would see a £144 increase per year for every £100,000 borrowed. Credit: ITV News

Kerry Goding is one such person who would see their monthly repayments increase by £12.

During the whole time she has owned her Sheffield home, she has only ever had rate reductions on her variable rate mortgage, but wants to know how much her mortgage will go up in the long term.

"How much is it going to go up?" She asked.

"How quick is it going to go up? How much is it going to go up in the long-term?"

Kerry Goding wants to know if the rate rise is a one-off or not. Credit: ITV News

Similarly to Ms Goding, almost four million other households in the UK will see their mortgage base rates rise, however, the 0.25% increase would still see much lower rates than in previous years.

Average standard variable rates have come down from 15.1% in 1990, to 7.4% in 2007, and to 4.6% in 2017.

Standard variable rates are lower now than in the past. Credit: ITV News

It is not just the 3.7 million variable rate mortgages which will see costs go up.

In recent years, low-cost borrowing has meant consumer debt has exploded.

Some 3.7 million variable rate mortgages would increase if the Bank of England raises interest rates. Credit: ITV News

Simon Harding hit money troubles after his wife died and he lost his job, leaving him with £7,000 worth of debt on credit cards and personal loans.

He is now on a debt management plan after struggling with his repayments, but says that he wishes he had given his borrowing more consideration at the time.

Simon Harding fell into money troubles after his wife died and he lost his job. Credit: ITV News

"It's so easy to take the debits and loans, knowing 'I can afford it now'," Mr Harding said.

"But you don't think: 'Can I afford it if x, y, and z happen?'"

With the cost of living already rising and Christmas coming, even if officials decide the time is right for a rate rise, many bill payers may think differently.