Just under four in ten (38%) said they are worried about the affect that interest rate hikes will have on their personal finances. This figure rises to half (50%) among millennials, those aged 21-42 and 43% of those aged 35-54 but falls to 23% in the baby boomer, 57-75, age group.
One of the most immediate impacts of soaring interest rates is its effect on debt repayments. Research shows that over a quarter (27%) are concerned about the impact it will have on repayment on short-term loans such as credit cards, 35% are apprehensive about higher mortgage payments and half (51%) are worried the government will pass on the increase in tax raises.
When asked about financial priorities for the year ahead, unsurprisingly, paying for basic living expenses such as utilities, childcare, rent and food (38%), came out on top. However, with coronavirus restrictions largely over, this was closely followed by enjoying life (34%) including holidays, socialising and theatre and sporting events. The third priority was building up emergency savings (32%).
Kate Smith, Head of Pensions at Aegon comments: “We are without question living in unprecedented times but despite the worst of the pandemic seemingly behind us, we are now facing an economic climate that will impact the day-to-day lives of households up and down the country. With inflation now at his highest since before the days that the internet was widely available and higher interest rates looking highly likely, many people will be feeling a financial squeeze like never before.
“Our research shows that people are worried about the pressure on their purse strings from all angles, with a high number concerned about tax rises impacting their take home pay while soaring interest rates will increase repayments on any debt, including a mortgage. It is unsurprising that the top financial priority for 2022 is paying for basic living expenses. It’s never been more important, regardless of situation, to make a realistic financial plan for both the short and long-term. Doing so can help with budgeting for immediate and future goals.”
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