A quarter of borrowers will not be able to afford their mortgage if interest rates hit 5%, according to a new survey of more than 2,000 homeowners.
Successive interest rate rises, combined with soaring bills, are causing concern among borrowers, with many worried as to whether they will be able to afford their mortgages.
With the Bank of England widely expected to increase interest rates again on Thursday for the seventh time since December, those who do not 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 surveyed think it somewhat unlikely or very unlikely that they will be able to afford their payments were interest rates to hit 5%, according to the quarterly Anthony Ward Thomas Attitudes to Moving survey. A further 13% of respondents said they did not 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, 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. Indeed, 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% did not know.
Anthony Ward Thomas, 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.”
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