Research commissioned by credit information provider Equifax and carried out by YouGov shows that over 50% of UK homeowners believe an interest rise of one percentage point would have a negative effect on their finances and would struggle financially to meet an increase in their monthly mortgage repayment.
Homeowners in the East Midlands topped the table of those who feel the most negative at 16%, with their neighbours in the West Midlands topping the table for those who feel the most positive about coping with an interest rate rise at 8%.
This fear is underlined by figures from the YouGov research commissioned by Equifax which reveals that many homeowners don’t know how an interest rate rise could affect their ability to meet their monthly mortgage repayments.
Andrew Webb, sales and marketing director of Equifax Personal Solutions, said: “The issue that many homeowners are currently facing is the uncertainty surrounding interest rates. When asked how much a potential rise of 1% would affect their monthly mortgage repayment, 40% of homeowners did not know, with those living in Wales the least certain at 57%.
“While a third of the homeowners we surveyed are currently protected by a fixed rate mortgage, many are already thinking about how they can prepare for any rise that occurs before their fixed rate deal ends. For these individuals, an early review of their financial commitments could help them to prepare for a future mortgage application.
“According to our research, many homeowners see value in cutting back on their lifestyle spending, including holidays and socialising, in order to account for potential increases in essential future expenditure. Homeowners looking to apply for a new mortgage as part of that process should be aware that their current financial behaviour could impact their ability to get the mortgage they want.
“This is particularly important as lenders are required to conduct more rigorous affordability assessments following the introduction of the Mortgage Market Review at the end of April.”
