The vast majority (86%) of people with assets including property said rising mortgage costs would impact on their cashflow, and 23% would cut down on pension payments as a result, according to research by Saltus.
The survey of 2,004 people with assets of £250,000 or more found that 39% had already seen additional strain due to rising rates, while 47% anticipated pressure if rates rose further.
In addition to pension payments, two-fifths (41%) would cut down on personal spending and 35% on travel in order to handle the rise in mortgage costs.
Mike Stimpson, partner at Saltus, said: “The recent increases in mortgage rates were already having a significant impact on homeowners across the UK – in May, 39% of all respondents to our research said rising mortgage rates were already putting a strain on their cash flow while a further 47% said further rate rises would cause issues.
“In May the average 2-year fixed rate was 5.26% – now, after rising steadily – the average deal is at a 15-year high of almost 7%, so it is safe to say a huge number of people will be struggling to cover the rising costs.
“The Bank of England has warned that around 1 million households will be facing a £500 hike in their monthly payments by 2026, which is £6,000 year extra – a hit very few will be able to absorb, especially with pay failing to keep pace with inflation.
“Our research also shows that eight in ten parents are helping support their adult children financially – 23% to cover mortgage payments specifically – despite the fact many are struggling with extra expenses themselves – and for many, there is only so much ‘cutting back’ that can be done.
“As a result, one in five say they will have to reduce their pension contributions to cover rising mortgage costs.
“Whilst reducing pension contributions may seem like a good solution, people need to be wary of cutting back on longer-term investments in order to cope with the current strain.”
