Half of property owners with variable rate mortgages aren’t aware that their repayments may rise in the next year, according to a report from Barclays and the Centre for Economics and Business Research (CEBR).
Furthermore, another 46% are unable to recall what the current Bank of England base rate is, 61% are unsure when they might rise, while 88% are completely oblivious to Bank of England’s latest interest rate forecast.
Even with CEBR predicting a minimum total mortgage payment rise of £723.8 million across the UK, over three quarters (76%) still aren’t putting money aside for interest rate rises.
According to this research, homeowners blame different political and regulatory statements, conflicting family views and changing market commentary as the main reasons behind this general uncertainty.
This lack of awareness may cause UK mortgage holders to experience financial difficulties in 2015, as CEBR predict that homeowners across the UK could incur a potential £1.1 billion total rise in mortgage repayments by the end of this year.
This is based on CEBR’s ‘sharp but potential’ model suggesting there could be three rate rises in 2015 (which would take base rate to 1.25 per cent by December 2015). Even a single interest rate rise of 0.25% in May 2015 and would mean homeowners across the UK would be paying, on average, an additional £101.33. At a very minimum CEBR predicts an average annual £81.12 increase in mortgage payments for homeowners by the end of the year.
The survey also found that some 45% of UK homeowners believed they could have missed out on better mortgage rates and so paid out more because they were unsure whether to fix or change their mortgage or not.
People between the ages of 30 and 49 can expect the largest climb in mortgage repayments, with a potential £362.1 million increase in total mortgage repayments. Regionally, those in the South East face the biggest rise in payments with a total of £158.9m. However, CEBR have predicted that London’s homeowners can expect their payments to be reduced by £20 per person on average by the end of next year. Although, when taking the region as a whole, total mortgage repayments increase by £124 million as the number of mortgage paying households in the capital increase.
Post courtesy of Financial Reporter.