With the recent steep rises in the Bank of England’s interest rates, it was inevitable that mortgage repayments were going to rise. However, a recent survey suggests that the position is worse than most people expected. It’s now expected that monthly repayments will rise by an average of £617.
The Research Results
According to research by The Mortgage Lender (TML), 80% of homeowners are concerned about rising rates, with 37% extremely concerned. This concern is even higher among people between 25 and 34, and with a first-time buyer mortgage costing more than renting in some areas, for the first time since 2010, this could impact seriously on the number of young people buying homes.
These figures are of particular concern since many mortgages are coming up for renewal for the first time since the current crisis began. The average amount that homeowners in this position estimated their monthly repayments would rise was £617.45 — up from £176.84 less than twelve months ago.
What Are Homeowners Doing About It?
Inevitably, there are some homeowners (5%, according to the survey) who are doing nothing about this issue, perhaps hoping it’ll solve itself. However, 28% said they were speaking to their mortgage lender to try to sort something out, while 25% were similarly speaking to a mortgage broker.
Other solutions respondents reported range from negotiating a longer-term mortgage to returning to work or looking for a higher-paying job. Others were borrowing from family or drawing on long-term savings. However, 5% were considering selling and returning to mortgage and 4% were considering selling their buy-to-let property.
As Steve Griffiths, Chief Commercial Officer at TML, points out, speaking to your lender or broker is possibly the best approach, since it “can help demystify the challenge, allow you understand all your options and guide you to the route that will work best for you and your circumstances.”
How Might This Affect You?
Of course, you may be in the position of facing steep rises in your mortgage rates, and this could have an effect on your business’s profitability — especially if you’re a sole trader, without clear distinction between business and personal finances. Obviously, if your business is renting out property, your buy-to-let mortgages could be affected.
Even if there’s no direct impact, though, your customers might be struggling harder to pay your invoices due to the effect of steep mortgage rises. If you’re finding it difficult to get paid due to the crisis, give me a call and find out how I can work with you and your defaulting customers to ensure you’re paid as quickly as possible.