10:30 AM, 21st September 2022, About 5 days ago 1
A quarter of borrowers will not be able to afford their mortgage if interest rates hit 5%, a survey has revealed.
With interest rates widely predicted to rise tomorrow (Thursday), it will be the seventh rise since December.
And now the Anthony Ward Thomas Attitudes to Moving survey has found that successive interest rate rises, combined with soaring bills, are causing concern among borrowers worried as to whether they will be able to afford their mortgages.
For those borrowers who don’t have fixed-rate mortgages, or whose fixed-rate mortgages come to an end over the next 12 to 18 months, are concerned as to how much their home loan will cost them.
Indeed, 25% of borrowers think it is somewhat unlikely or very unlikely that they will be able to afford their payments if interest rates hit 5%.
A further 13% said they didn’t know whether they would be able to pay their mortgage in this scenario.
Unsurprisingly then, the prospect of 50-year mortgages got the thumbs up from those who were questioned, with longer terms meaning lower monthly payments.
More than a third (36.5%) of respondents interested in buying a new home said they were very or somewhat likely to opt for a 50-year mortgage if it improved their affordability.
The threat of further rate rises is not putting off all home movers, however, with nearly a quarter (24%) of respondents still planning to move within the next year.
Respondents remained bullish about the prospects for the market, with 67% confident that property prices would either remain the same or rise over the next year.
Only 15% thought prices would fall, while 18% didn’t know.
Anthony Ward Thomas, the founder of Anthony Ward Thomas Removals, said: “The soaring cost of living is a growing concern.
“Interest rates are rising as the Bank tries to control runaway inflation and borrowers are clearly worried as to just how high they will have to go.
“Throw in higher energy, fuel and food bills on top of greater mortgage costs and it is no surprise that people are increasingly uneasy.”
Meanwhile, another survey of 2,000 adults in the UK has found that 33% of those with a mortgage say their repayments have become unaffordable because of rate rises.
For younger mortgage holders between 18 and 34, that figures rises to 48%.
The survey from Butterfield Mortgages also found that 44% of mortgage holders are more worried about interest rates than they are about inflation.
Those surveyed also expressed a desire for more support from lenders to help them navigate the economic landscape with 45% saying their lender has been proactive with communications and guidance about the potential implications of another interest rate rise.
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