Consumer confidence in the economy has fallen into negative territory for the first time this year, according to a new survey.
The biggest consumer fear is an interest rates raise which is widely expected to occur in the next six months. Over 68 per cent say a rise in rates would have a negative impact on their personal finances.
57 per cent of people expect interest rates to go up in the next six months – up 13.6 percentage points from last month.
Bank of England governor Mark Carney said “the new normal” interest rate is likely to be 2.5 per cent and suggested it could reach that level in early 2017.
Around 15m UK home-owners appear to be worst affected but a significant rise seems to be off the cards. Just 4.6 per cent believe interest rates will “rise significantly”.
“Many people have adapted their household budgets to a low interest environment so any increase is initially going to come as a bit of a shock”, commented Neil Saunders, managing director of analysts Conlumino.
Conlumino say a 0.5 per cent rise in rates could cost the average mortgaged household £280 more a year in repayments – £1.9bn a year.
Saunders said of all the data it measures, job security, cost of living and other metrics were “pretty positive” but said interest rates were weighing heavily of the minds of consumers.