0:03 AM, 20th June 2023, About 9 months ago
A study has exposed the vulnerability of millions of homeowners who may face mortgage defaults if interest rates continue to climb.
Moneyhub’s research indicates that 26% of homeowners with a mortgage could struggle to make their payments if there were another rate hike.
The study also found that 35% of these homeowners are worried about affording their mortgage when it comes time to re-mortgage due to increasing rates.
It says that 1.4 million homeowners are expected to re-mortgage in 2023, and with 1.5 million on standard variable rates and an additional 85,000 holding tracker mortgages, many may find themselves in financial trouble following further rate increases.
Moneyhub’s managing director of decisioning, Suzanne Homewood, said: “Times are challenging for homeowners.
“Mortgage rates continue to rise to levels not seen since before the financial crisis and other essential costs are eroding financial buffers, leading to a complex situation and increased risk for both consumers and lenders.
“It’s clear that there needs to be more support for those remortgaging or on tracker or variable rates who will be feeling the impact of rising monthly payments.”
She added: “With the FCA’s new Consumer Duty regulations coming in next month, it’s vital that banks and lenders can prove products that are suitable for their customer across the life cycle of the product.”
Young people, particularly those with limited credit history or low credit scores, are especially susceptible to the negative impact of rising interest rates.
Approximately 44% of them have expressed concerns about meeting their mortgage obligations if rates continue to rise.
London’s homeowners are also at high risk, with 51% admitting they are apprehensive about making mortgage repayments should interest rates increase.
UK Finance recently reported a surge in the number of households experiencing mortgage arrears during the last quarter.
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