Even a small increase in interest rates could lead to thousands of bankruptcies in the UK. That’s the warning from The Insolvency Service, as they warn that many people would not be able to afford their loans, even if the underlying rate of interest rose by just 1 per cent.
The Times reports –
“An extra 18,000 people will go bankrupt by 2020 if the cost of borrowing rises by only one percentage point, official figures suggest… The Insolvency Service predicts that 257,800 people will become bankrupt over the next three years if interest rates stay unchanged but that would rise to 275,900 by April 2020 if the Bank of England increased the base rate by 1 percentage point. Even a 0.5 point increase would mean almost 10,000 more people facing financial ruin.