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Steve Chiotakis: For much of the financial crisis, we saw interest rates in the U.S. and in Europe at or just above zero. But rising inflation is putting pressure on the European central banks to raise rates. And the U.S. may not be far behind.
Christopher Werth reports now, higher rates come at the expense of homeowners.
Christopher Werth: It's an early morning start for Georgina Hockley and her partner, Stuart, who are busy fixing up their small two-bedroom bungalow about an hour outside London.
Georgina Hockley: This is the master bedroom, completely plastered from scratch.
Georgina gives me the tour while the couple's dog, Poppy, begs for attention. Georgina and Stuart bought this house a year and a half ago on an adjustable rate mortgage. With interest rates so low, the payments have been affordable. But the Bank of England is expected to begin raising rates this year, and that means the couple's payments won't stay at the current bargain-basement level.
Hockley: We realize that it's at the lowest of the low. So I mean if it did go up by a couple of hundred pounds or something, we'd just live with it and kind of take that risk I suppose.
Plenty of others are taking that risk, too. More than three million adjustable rate mortgages were signed in the U.K. in the past five years. Jane King of Ash Ridge Private Finance says some of those people have cause for concern.
Jane King: There will be people who borrowed say, five or six years ago, who are going to struggle when rates do go up.
In fact, low interest rates may be the only thing keeping some people in their homes both here, and in other European countries. Marie Diron is an economist at the forecasting consultancy Oxford Economics. She says adjustable rate mortgages are very common not only in the U.K., but also in Spain and Ireland.
Marie Diron: The problem is that the countries where you have these variable rates are the countries where the housing market is already the most vulnerable.
That's certainly true in Ireland. Brian Lucey of Trinity College Dublin fears a rise in interest rates could force up mortgage payments and push homeowners into foreclosure.
Brian Lucey: You're looking at tens of thousands of people being forced into either having an un-repayable mortgage or losing their homes.
And he says that could spark another banking crisis as banks -- already beleaguered with bad debts -- would be left holding even more empty homes on their books.
In London, I'm Christopher Werth for Marketplace.