Residents in South Yorkshire could be hundreds of pounds worse off if interest rates rise, affecting mortgage payments.
Accountancy firm Price Waterhouse Cooper has warned a one per cent rise in interest rates could leave households with ‘increased stress on budgets’ costing around £550 a year.
The interest rate is currently 0.5 per cent, but financial experts are predicting it may need to rise to between three and five per cent by 2018 to control economic growth.
Meanwhile StepChange, a charity helping struggling households to make ends meet, says people it helps in Sheffield owe an average of £12,821 in unsecured debts.
The charity believes Christmas spending will have left some families owing even more – and is braced for extra calls.
Paul Blomfield, Labour MP for Sheffield Central and secretary of the all-party Parliamentary Group on Debt and Personal Finance, said: “Interest should be kept as it is until underlying problems of falling incomes pushing people into debt have been resolved.
“I remember the devastating levels of interest in the 1980s and 1990s when people were losing their homes. There is a danger of household budgets facing a tipping point where people can’t afford to pay their debts.”
A spokesman for StepChange, which works with Sheffield Council to offer debt advice, said: “It’s often the case people have existing debts and add to these over Christmas.
“We see increases in the number of calls we get in the first few months of the year.”