Rising Interest Rates Not a Concern for Majority of Homeowners

Data gleaned from the latest Halifax Housing Market Confidence Tracker makes for interesting reading. Most surprisingly, less than a third of people currently meeting mortgage payments are worried about the potential for future rises in interest rates.

The data reveals just 29% of participating mortgage holders aged 16 and over are concerned about this factor. This compares with 36% at the same time last year, and 42% at the same time in 2014. The figures cover those respondents who indicated they were either very concerned or fairly concerned about such a rise.

The data is something of a surprise given the fact the interest rate remained at 0.5% between 5th March 2009 and 4th August 2016, when it dropped to 0.25%. Many mortgage holders have enjoyed several years of low interest rates until the rise to 0.5% seen on 2nd November last year.

Larger proportion of people ‘not at all concerned’ about the prospect of rising interest rates
The data also indicated 39% of respondents were not worried about their mortgage payments being affected by a rise in interest rates. This is higher than the 31% seen at the same time last year, and the 28% recorded in 2014.

“It would seem people aren’t overly concerned about their ability to meet their mortgage payments, even if there was a further rise in interest rates,” said Darren Pescod, CEO of The Mortgage Broker Limited. “This is further seen by the number of people who confidently said they could meet a significant rise in their repayments. The data indicated nearly half of those questioned – 47% – would either face no problems at all, or that payments would need to rise by £150 or more to trigger problems.”

The data also indicated very few of those interviewed are close to their limit when considering how much higher their mortgage payments could go without triggering any financial issues. Only 5% said they would experience problems if their payments went up by £24 or less each month.

Rising interest rates aren’t a concern for those looking to buy, either
The data also revealed very few people who are considering buying their first home are worried about the prospect of rising interest rates. Their main concern was finding enough cash to put together the required deposit. This is no big surprise, since the challenge of meeting a deposit has become harder with rising house prices and stagnant wages for many.

“It’s reassuring to see so many mortgage holders in a good position regarding meeting their monthly repayments,” Darren Pescod added. “The data would indicate very few people are only just managing. While an interest rate rise would no doubt make life harder for some, the figures appear quite encouraging. We do expect to see one or two further rises in interest rates, although the latest indications reveal this may occur in the foreseeable future, rather than the immediate future. It remains to be seen when that occurs.”

Published on 18 April 2020

See all posts in the Latest category