26th August 2014
Mortgage borrowers expect to pay £590 more a year on average if interest rates rise by 0.5% according to research by Comparethemarket.com.
The firm says that for the 11.2 million UK homeowners with mortgages, equates to a staggering £660m more per year. The comparison site says 55% of borrowers are worried about interest rates rising. However, not everyone is aware of the potential hike in rates. Some 32% of homeowners are “unaware” of the likely rise in interest rates and a further quarter say they are “unaware” of how interest rate rises might affect them.
Comparethemarket’s data also reveals that increasing numbers are looking to remortgage now to take advantage of the historically low interest rates while they still can, with remortgaging enquiries now accounting for 42% of all mortgage inquiries.
Simon McCulloch, director of insurance at comparethemarket.com, says: “Low interest rates may have spelled bad news for savers since 2008, but mortgage-paying homeowners have really benefitted. Our research has shown that, on average, mortgage repayments have been £112 less per month for every household since 2008. However, nothing lasts forever and, with the potential interest rates rise just around the corner, it’s good timing for those with mortgages to start shopping around to secure the best rates ahead of the rise.”
“For first time buyers, things are really tough. With increasing property prices outstripping wages and harder lending rules, getting on the property ladder remains challenging. It is not only vital that they shop around for the best available mortgage, but even more important that they look at every opportunity to maximise their savings. Most of the best deals for savings accounts are offered to new customers, so spending five minutes online is really worthwhile.“
The research also revealed that two thirds (60%) of UK consumers have taken no steps either to lessen the impact, or take advantage of the likely rise in interest rates and only 5% are overpaying on their mortgages while the rate remains low.
Research firm Populus interviewed 2,055 adults. The survey was conducted online between 16 and 18 July 2014.