As interest rate rises look increasingly likely, almost half of mortgage borrowers (46 per cent) admit they would either definitely or potentially struggle if the interest rate on their home loan went up by 3 per cent.
Such a rise could leave borrowers with repayment mortgages paying an additional £150 a month for every £100,000 owed, Ocean Finance says.
UK homeowners were asked how they would cope making the increased payments, as part of a survey conducted on behalf of loans and mortgage broker Ocean Finance.
More than a third (38 per cent) said they would potentially struggle with the increase and would have to look at ways to save money, while 7.9 per cent said they would definitely have difficulties and would immediately seek to sell their property.
Just over one in three (35 per cent) mortgage customers would budget to afford higher payments. Only one in five (19 per cent) claimed they would comfortably manage a 3 per cent rise.
Worryingly, one in 10 homeowners said they already have had difficulty keeping up and have fallen behind, while a further one in five said they were up to date but struggling to pay the mortgage.
Ian Williams, spokesman for Ocean Finance, says:
“Clearly it is likely to take a while for rates to rise by 3 per cent. But if they do go up by that much over the next couple of years it’s worrying to hear that nearly half of mortgage borrowers are concerned about how they would keep up with the repayments – especially when one in 10 are already behind with their payments.
“If homeowners are currently on a variable rate or tracker mortgage and are concerned about how rate increases might affect them, they could seek out professional advice to find out if switching to a fixed rate mortgage could be beneficial.”
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