The online survey, conducted by YouGov, also reveals that 28% of UK homeowners on a variable rate mortgage are unaware of how much their monthly payments will be if interest rates rise by 0.5%.
The impending rate rise threatens to put additional pressure on household expendable income with 27% of homeowners likely to cut back on their grocery shopping in order to keep up with their mortgage payments, should rates rise.
41% of respondents state they would need to cut back on going out and almost a third (32%) would need to cut back on their holidays. Only 6% would cut back on their pension contributions in order to meet their mortgage payments.
Jake Ranson, Banking & Financial Institutions Director, Equifax UK & Ireland said:
“The low interest rate environment has created a false sense of security among many homeowners, particularly for those who have taken out their first mortgage in recent years. Homeowners have had time to get their house in order, yet the research shows a high proportion of homeowners will get a nasty shock once rates rise.
“A bump of 0.5% can have a significant effect on mortgage repayments, forcing unprepared homeowners to seriously rethink their spending habits. There is also a risk of falling into arrears. This research highlights that although many anticipate a rate change, some borrowers are not being realistic about the impact this can have.”
