Consumers have dismissed two interest rate rises from the Bank of England and a series of warnings about the dangers of stacking up debt to borrow at a record rate, according to new figures.

Forum Response: Association of Chartered Certified Accountants

Chas Roy-Chowdhury, ACCA's head of taxation, said: "The real worry is that many of those who are borrowing to an excessive degree are probably those who are most vulnerable to a deterioration in the job market or to a future interest rate increase.

"It is vital that people take on debt with their eyes open. They must realise that they will have to repay it all one day and will incur significant levels of interest.  This means they may effectively be paying up to 30 per cent more for their purchases.

"Lending figures recently revealed that mortgage equity withdrawal - borrowing against the value of a home to finance spending - reached a record £7 billion in the third quarter of 2001. Thousands of homeowners have taken advantage of the historically low rates to remortgage their properties in order to finance home improvements or pay for holidays. People need to be aware that interest rates could rise sharply, resulting in debt burdens, which they can no longer finance, particularly if they suffer a change in circumstance, such as redundancy." 

Forum Response: Institute of Directors

Graeme Leach, chief economist at the Institute of Directors, said:"There is now a strong likelihood that interest rates will rise by a quarter point next Thursday, despite the recent strength of the pound. UK consumers still are not listening and so the Bank of England will have to shout even louder."