30% of UK Homeowners Struggling with Increased Mortgage Costs

30% of Homeowners Struggling with Increased Mortgage Costs

New research from Barrows and Forrester is showing the impact of rising interest rates on many UK homeowners, and official inflation data released today indicates there will be little to cheer about in the short term.

This morning, people woke to the news that the UK’s CPI inflation rate didn’t fall by as much as many predicted. Rather than dip into single figures, it fell from 10.4% to 10.1%, higher than the BoE’s inflation forecast.

The stubborn inflation numbers will likely mean the continuation of rate hikes, which will cause more stress to the UK’s homeowners already struggling with increased mortgage costs.

Today, Andrew Sentance, a former BoE policymaker, called for further interest rate increases to help push the inflation number back to single figures and stated that the BoE was failing ‘Badly’. Compounding inflation conundrum is the recent announcements of oil production cuts by OPEC+, which will push prices higher, and in the opinion of some, could keep inflation high in the West.

However, even if the rate of inflation drops under 10%, no one knows how long it will remain in the 9s and 8s etc., which could keep interest rates at what many will feel is unaffordable. To gain a better understanding of the problems facing UK homeowners with mortgages, let’s look at what a new survey from Barrows and Forrester reveals.

The estate and lettings agent conducted a survey involving 2,304 current homeowners with a mortgage and found that 57% have seen the monthly cost of their mortgage increase since interest rates first started to climb in December 2021.

This increase has been marginal for most, with 54% stating it had increased by less than £100 a month. However, 28% have seen an increase of between £100 to £250 per month, while 18% have been hit with an increase of over £250 per month.

At a time when household finances are already stretched thin, it’s perhaps surprising that just 30% stated that they are now struggling to cover the increased cost of their mortgage. However, this remains a sizeable number of homeowners now in financial turmoil.

Despite this, just one in ten stated that they were considering selling their home due to the higher cost of their monthly mortgage repayments.

However, 30% again stated that they were concerned that the value of their home may have reduced in the current market.

James Forrester, the Managing Director of Barrows and Forrester
James Forrester.

Managing Director of Barrows and Forrester, James Forrester, said, “We’ve seen interest rates rise consistently now for over a year, and this will have put inevitable pressure on many homeowners who will have seen the cost of their mortgage increase as a result.

The silver lining is that only a relatively small proportion are now struggling with the cost of their monthly mortgage repayments, and an even smaller number are considering selling their home as a result.

Of course, this will come as little comfort to those who are struggling, and in this instance, you should speak to your lender sooner rather than later. They will do what they can to help ensure you are able to maintain your payments and avoid defaulting on your mortgage.

The good news is that the market has stood strong in the face of recent mortgage market turbulence, and so while the cost of borrowing may have climbed, house prices haven’t fallen drastically as many predicted. There’s hope that we may have also seen the end to upward interest rate growth, and so things should start to improve over the year ahead.”

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30% of UK Homeowners Struggling with Increased Mortgage Costs 2

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