New research has revealed one in 10 UK mortgage holders will not be able to afford their mortgage payments if the cost of living continues to rise, according to research firm Opinium.
It’s also reported that over half (56%) of homeowners said the current cost of living crisis will make it “more of a struggle” to pay their mortgage. Two in five (41%) will need to make cuts elsewhere to be able to pay their mortgage, and almost one in 10 (8%) will need to borrow money from family and friends.
Two fifths (40%) of mortgage holders currently have a fixed term mortgage due to end in the next two years. For those whose deal is coming to an end, if rates continue to rise as they are over two in five (43%) will need to make cutbacks to be able to cover their mortgage payments. One in seven (13%) will need to ask for a mortgage holiday and one in 10 (10%) would need to temporarily switch to an interest only mortgage. What’s more, 6% have said they would need to sell their home.
Almost two in five (37%) have paid, or would consider paying, to exit their mortgage deal early if it meant switching to get a better rate that is fixed for longer, and those considering this would be prepared to pay on average £1,864 to do so. Over a fifth (22%) have either already spoken to their mortgage broker about this or plan to get in touch to discuss their options in light of the cost-of-living crisis.
Alexa Nightingale, Head of Financial Services research at Opinium commented:
“With the mortgage market in disarray following the latest interest rate rise announcement from the Bank of England, many homeowners will be feeling deeply concerned about being able to afford their mortgages – particularly those who are coming to the end of fixed term deals in the near future.
Despite the recent announcement from Jeremy Hunt that lenders are to give mortgage-holders more flexibility to help deal with rising rates, including implementing a 12-month minimum term before repossessing homes and allowing borrowers to extend their loan term, many will feel this doesn’t go far enough.
Given how many consumers could struggle to cover their mortgage payments, or even have to sell their home if things continue the way they are, support from the government, as well as these options agreed with lenders, cannot some soon enough.”
