You are here: Home - Household Bills - News -

Borrowers prepared for potential base rate rises

Written by: Owain Thomas
Homeowners are largely unconcerned by the potential of a base rate rise in the next year although house price optimism remains subdued.

Just 29% of existing mortgage borrowers are concerned about the possibility of rising interest rates affecting their ability to meet monthly repayments, according to research by Halifax.

This has fallen from 36% six months ago and is despite the first base rate rise for a decade being introduced in November.

In contrast, in 2014, 42% said they were worried about possible rate rises hitting affordability for them.

On being asked how much monthly mortgage payments would have to increase by before they would struggle to meet them, 47% said it would have to be more than £150 or that they would face no difficulties.

Only 5% felt that an increase of £24 or less a month would be an issue, with a quarter point increase on the average mortgage (£156,000) equating to around a £17 rise in average monthly payment.

Similarly, interest rates were not considered a major obstacle by those surveyed when it came to buying a home.

Raising a deposit continued to be the main issue buyers faced, followed by concerns around job security and rising property prices.

Five-year low

Overall, consumer sentiment about whether average house prices will be higher or lower in a year’s time remained at a five-year low, climbing just three points from October 2017 to +33.

Half of those surveyed expect house prices to rise over the next year, the same as autumn 2017 and remaining at the lowest level since April 2013 (45%).

However, fewer people were negative about the housing market, with 17% predicting a fall in prices over the next year, down from 20% six months ago, with 26% expecting prices to stay flat.

Midlands residents were the most positive about whether the next 12 months would be a good time to buy or sell while only Londoners (-10) believed the next 12 months would not be a good time to sell a property.

Those under-25 were the only age group with a negative buying outlook (-14), compared with +24 among 55 to 64-year-olds.

Multiple increases would be a worry

Halifax managing director, Russell Galley, said: “With mortgages the most affordable they have been in a decade, it is perhaps unsurprising that a proportion of people remain unconcerned by the prospects of a base rate rise.

“This research suggests that for the majority of mortgage holders, there would need to be multiple rate increases before the affordability of their repayments becomes an issue.

“It’s encouraging to see fewer people now predicting a fall in house prices compared with six months ago. Overall, we still expect house prices to rise in line with our forecasts for the rest of the year.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape, and moving your cash savings to a higher paying deal is a good plac...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week