22 October 2007
British homeowners are saving less as a result of interest rate rises, research from Alliance & Leicester (A&L) shows.
Although there has been no increase of the base rate by the Bank of England for over three months, the rise to 5.75% in July was the fifth in the previous twelve months - putting the squeeze on mortgage holders.
As a consequence, A&L says in its latest "borrowing monitor", demand for unsecured loans fell by 3% in the second quarter of 2007.
By contrast, the overall borrowing rate - including those who do not need to make mortgage payments - was up by 3%.
Sean Murphy, director of strategic planning at A&L, said: "Families are cutting back on their borrowing and their saving to help ensure they can afford higher mortgage and other household bills.
"Their family budgets have been under pressure and they have cut their cloth accordingly."
While the proportion of savings to incomes in the UK was up 2.1% for the quarter at 3.1%, this still represents a significantly lower level than has been registered over the past decade (6%).
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