By Jonathan Davies

The majority of people with mortgages could handle a rise in interest rates, according to the Bank of England.

A survey by the Bank of England showed that just 4% of people with mortgages would need to take action in order to pay for it, if interest rates were raised to 2.5%.

Those figures were based on a 10% increase in income. If income is flat, the survey suggests that 37% would need to take action.

Interest rates have been at the record low of 0.5% since March 2009.

"These results do not imply that increases in interest rates from their currently historically low level would have unusually large effects on household spending," the Bank of England said in its report.

However, it said that if interest rates were increased, it would mean more people spending more than 40% of their monthly income on the mortgage, which puts them at greater risk of financial problems.

If income were to rise by 10%, the number of people struggling to pay their mortgage would be up by a third to 480,000. But that would rise to 660,000 if income stays the same.

Join us on
Follow @freshbusiness