Research from Legal & General has found 68 per cent of homeowners expect rates will rise within a year.
However the historically low rates of the last five years have distorted consumers’ perceptions, with a quarter of homeowners believing “normal” mortgage rates are between 1.1 per cent and 3 per cent.
Young people’s perception is the most distorted, with 26 per cent of 18- to 24-year-olds saying a normal rate would be up to 1 per cent, but no more, while a further 26 per cent admit they don’t know exactly what a normal rate should be.
Nearly half of over-65s (46 per cent) say they don’t know what a normal rate is.
Legal & General’s latest Mortgage Mood survey also showed that 45 per cent of those who expect rates to rise in the next year believe that rates won’t increase by more than 1 per cent.
Looking forward two years, over half of homeowners (52 per cent) feel that rates still won’t increase by more than 2 per cent, with only 12 per cent predicting an increase of 3 per cent over the next 24 months.
The research formed part of the quarterly survey run by Legal & General Mortgage Club, which tracks the attitude of homeowners across the UK on a range of mortgage-related issues.
Legal and General Mortgage Club director Jeremy Duncombe agrees with the public sentiment that any rates rise in the next 12 months was likely to be around 1 per cent.
“Despite this market awareness, the majority of homeowners are still not actively seeking to remortgage whilst they have the opportunity to take advantage of historically low rates,” he says.
“This can perhaps be explained by the fact that so few people seem to know what ‘normal’ looks like.”
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