Brits fear rising rates will crush their house dreams

Britons are increasingly worried about rising interest rates, fearing it will hurt their chances of moving up – and staying – on the property ladder.

According to Market Financial Solutions, which commissioned pollster Opinium to survey more than 2,000 UK adults, homeowners and tenants fear the twin threats of rising rates and high inflation will crush their dreams of home ownership.

Some 28% of renters told MFS that rising interest rates were hurting their chances of getting on the ladder, while 19% of landlords admitted that a higher base rate would hurt their chances of getting on the ladder. pay their mortgage payments.

Paresh Raja, Managing Director of MFS, said: “The twin threats of rising inflation and rising interest rates will, of course, have serious ramifications on those looking to access or climb the ladder. of the property.

“As the cost of borrowing increases, homebuyers will need to carefully consider budgets and evaluate their options.”

As FTAdviser reported, the Bank of England raised the base rate from 0.1% to 0.25% in December 2021, before introducing a further hike to 0.5% in January this year.

But while MFS research showed 18% of UK adults intended to buy a home in 2022, with 14% of renters hoping to buy their first home – 66% said they were worried about the inflation and rising house prices.

Some 38% said the time and complexity now required to secure a mortgage is a major challenge when considering buying a property.

The research also revealed:

  • 28% of UK tenants say interest rate hikes pose a significant threat to their prospects of accessing the housing ladder.
  • 19% of current homeowners say further interest rate increases would hurt their ability to pay their mortgage.
  • 18% of UK adults intend to buy a property in 2022.
  • 66% fear rising inflation will ruin their chances of doing so.
  • Of existing owners, 14% plan to sell and move in 2022, while 6% hope to purchase an additional investment property.

Raja added: “Mortgage brokers will continue to play an important role in verifying viable options for homebuyers.

“But it’s important that all buyers – from beginners to seasoned investors – weigh their options, especially with many citing mortgage delays and complications as major issues in the process.

“Looking for the right financial product is important, but finding the right lender who can meet your needs and act quickly is vital.”

The price of real estate is rising

The research came as the National House Price Index showed a further rise in the average price, despite pressures from Brexit, inflation and the invasion of Ukraine, heightening geopolitical risks.

As reported by FTAdviser, the Nationwide HPI revealed:

  • Annual house price growth in the UK fell to 12.6% in February from 11.2% in January.
  • Price up 1.7 percentage points month over month.
  • The average house price exceeds £260,000 for the first time.
  • The price of a typical house is 20% higher than in February 2020.

According to Michael Bruce, managing director and founder of real estate agent Boomin: “We are currently riding a wave of growth in property prices, stimulated by a market that is experiencing a very strong demand for homes that are simply not available. .

“It’s natural for this wave to start losing its ferocity at some point, but there’s certainly no sign of that happening just yet, despite cost of living compression and double-digit increases. interest rates.”

Jonathan Samuels, managing director of real estate adviser Octane Capital, agreed. He said: “While two consecutive interest rate increases are always food for thought for homebuyers nationwide, what we are seeing now is a consideration, not a concern.

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