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One in four mortgage payers 'at risk' if interest rates rise

Robust wake up calls should be sounded to the estimated two million mortgage payers who would find themselves in serious financial trouble if and when interest rates rise, a think tank has warned.

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2 million mortgage payers 'at risk' from interest rate rise

An estimated two million mortgage payers would struggle to cope with a rise in interest rates, a think-tank has warned.

Even a small rise in interest rates could threaten the financial security of some homeowners, the think tank warned. Credit: PA

The Resolution Foundation warned the number of households spending more than one third of their income on keeping a roof over their head would balloon to 2.3 million by 2018 - even with a "relatively benign" raise.

The more ominous situation of households forced to put half their monthly income towards their mortgage could triple to 0.6 million to 1.1 million.

Both scenarios are based on assumptions that the Bank of England base rate, which has been at a historic 0.5% low for over five years, will approach 3% by 2018, in line with market expectations.

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