House buyers will struggle to make end meets if the proposed interest rate rise in 2015 goes ahead, after over a third of home-buyers admit they would find it difficult to cope if their mortgage became more expensive.
The average price range for property purchasers is £235,000 and with a combined income of £50,674, the average home buyer can afford monthly mortgage payments of £780, according to report: The MMR Muddle: Underprepared and Out of Pocket.
The true repayment figure would be closer to £1,300 a month with the ten per cent deposit and if the Bank of England does raise interest rates as it is expected to do in line with the economic recovery – partly fuelled by the housing industry – home owners could be stretched to breaking point.
The rise could push mortgage payments up to as much £1,440, almost double what the average home-buyer claims they can afford, if variable rates convert to 5.5 per cent at the end of typical two-year fixed deals — a 1.5 per cent rise on current rates.
Managing director of Experian Consumer Services, Peter Turner, said: “These findings show just how important it is to get your finances in the best shape possible in advance of a mortgage application.
“It’s not just a case of making sure you’re accepted, it’s a case of using your finances to land the best rate possible.
Ensuring that your mortgage application gets the highest credit score possible can make a difference of hundreds of pounds a month, and thousands over the course of a mortgage’s lifetime.”
