Rise in interest rates would be a 'disaster' for UK economy, warns Peter Hargreaves

A rise in interest rates could cause many UK homeowners to "throw away the keys" to their houses, according to Peter Hargreaves, the co-founder of financial adviser Hargreaves Lansdown.  

If mortgage payments were to rise above rental costs repossessions could become a big problem,' said Mr Hargreaves.

Rise in interest rates would be a 'disaster' for UK economy, warns Peter Hargreaves Photo: Jay Williams

Mr Hargreaves, who is stepping down as chief executive, warned that any attempt to increase interest rates would be "disastrous" for the UK economy and would lead to a wave of repossession as many people simply gave up paying their mortgages.

There are an awful lot of people just about financing mortgages on homes in negative equity because of low interest rates. However, if mortgage payments were to rise above rental costs repossessions could become a big problem," said Mr Hargreaves, who is one of Britain's wealthiest men with a fortune of nearly £600m.

By Harry Wilson
Published: 02 Sep 2010