Findings of the 2014 Homeowner Survey by the HomeOwners Alliance and Myhomemove, revealed that some homeowners feel so financially stretched that they say a rise in interest rates may mean they will struggle to find money for food, or may be forced to sell their homes.
Some aspiring homeowners fear a rise in rates may make it more difficult to realise the dream of owning their own home.
The survey, published as expectation mounts that the Bank of England may start raising interest rates soon, shows just how financially vulnerable homeowners are following seven years economic slowdown. The Bank of England Financial Policy Committee is examining what impact a rise in interest rates is likely to have on the housing market, but the survey suggests it could be far-reaching.
The 2014 Homeowner Survey, conducted by YouGov, also found that 64% of interest-only mortgage holders say they fear rising interest rates will make it more difficult to afford payments on loans and debts – suggesting that they could be more likely to be the most financially stretched group of homeowners. Amongst homeowners with all types of mortgage, the figure is 50%.
Among those that are likely to be most concerned are those aspiring to buy their first home – 54% of aspiring homeowners say they fear a rise in interest rates will make it more difficult to afford payments on loans and debts.
Younger homeowners are more fearful about a rise in interest rates than older homeowners. 49% of homeowners age 25-34 compared to 24% of homeowners age 55 or over say they fear a rise in interest rates will make it more difficult to afford payments on loans and debts.
Regionally, homeowners in the East are more fearful about a rise in interest rates. 47% of homeowners in the East of the UK compared with 34% of UK homeowners nationally fear rising interest rates will make it more difficult to afford payments on their mortgage and other loans/ debts.
Paula Higgins, chief executive of the HomeOwners Alliance, suggests that homeowners are already really struggling to make ends meet, and millions could be pushed into real financial hardship when interest rates start to rise.
She said:
"It shows just how severe the cost of living crisis is that a rise in interest rates could lead to some homeowners struggling to afford food or being forced to sell their homes. The Bank of England needs to tread very carefully to avoid causing widespread financial difficulties.”
