New research by The Mortgage Lender (TML) reveals that UK homeowners are increasingly anxious about the impact of rising interest rates on their ability to manage their finances. According to the study, 80% of mortgage holders are concerned about the effect of climbing rates, with the figure rising to 88% among those aged 25–34. As a result of the upward trend in rates, borrowers expect their monthly mortgage payments to soar by an average of £617 in the next two years.
The level of concern varies by age, with younger homeowners being the most anxious about their mortgage commitments. As many as 37% of all homeowners are extremely concerned, and 43% are somewhat worried about the financial implications of rising rates. This increased financial pressure comes as many mortgage products near their renewal dates, adding to the general unease.
An 11% of homeowners report needing to renew their mortgage within the next six months, and an additional 14% within the next year. Respondents anticipate a sharp increase in their monthly mortgage payments, expecting to pay an average of £617.45 more each month. This marks a significant jump from November 2022, when the expected monthly increase was merely £176.84.
Despite the rising concern, many are taking steps to mitigate the financial strain. About 28% of those who expect to see an increase in their mortgage payments are in talks with their lender to explore options, while 25% are consulting their mortgage broker to find the most favourable rates upon renewal.
Other strategies include looking for higher-paying jobs (18%), extending their mortgage terms (13%), or borrowing money from parents (9%). Some homeowners are even considering more drastic measures like selling their property and returning to renting (5%), or selling their buy-to-let properties (4%). Alarmingly, almost one in five homeowners (19%) have not taken any measures to prepare for the higher costs, and 18% are resorting to depleting their long-term savings, a move that could leave them financially vulnerable in the future.
Steve Griffiths, chief commercial officer at TML, said: “Homeowners have been living with the reality of rising rates for some time now. As mortgages come up for renewal, the challenges of affordability are beginning to hit more borrowers. It’s encouraging that many are taking proactive steps to navigate these challenges. Speaking to a broker or lender can provide clarity on available options and help homeowners choose the best course of action for their circumstances.”
