Our latest research has looked at what impact the recent increase in interest rates has had on UK homeowners. We surveyed over 1,000 UK homeowners and found that while it was the first increase for just 37% of respondents, this climbed much higher for those in the age bracket of 25-34.
Overall, the financial implications remained minimal across the board and market confidence remains high for the majority of homeowners, who have not been put off from a future purchase from the increase. But while the market as a whole remains unfazed by this increase, those in younger age brackets have been more deterred from climbing the ladder after experiencing their first rate increase.
As a homeowner, is this the first time you have experienced an increase in interest rates?
While it was the first increase for just 37% of UK homeowners, this climbed to 78% for those aged between 25-35.
London was home to the highest number of homeowners seeing a climb for the first time at 63%, with the North East being the highest region outside of the capital (55%).
What impact did this have on your monthly payments?
But despite this first for many, when asked what impact it had on their monthly mortgage payments, 64% hardly noticed, while 33% saw a manageable increase. Just 3% believed it had a serious impact on their monthly affordability.
45-50-year-olds were worst hit with 5% seeing a serious impact on their monthly payments, although this increased to 11% for those in both the South West and North East. It was least notable in Wales, where 83% of those surveyed answered that they had hardly noticed an increase.
Has the recent increase in interest rates put you off from buying another property?
Despite being the first increase in over a decade, 46% of those asked remained undeterred from buying another property, with 17% put off from a property sale and 13% putting the idea of a purchase on hold for the time being.
However, those in the lower age bracket of 25-34 seemed more deterred from another purchase with 56% put off from climbing the ladder, 40% indefinitely, 16% for the time being.
The increase was a put off in the capital more so than anywhere, where the high price of property can mean even a marginal hike can result in a large increase in unaffordability. 60% of homeowners in London were put off from another purchase by the recent increase in rates, 50% completely with a further 10% deterred from the time being.
How much would interest rates need to increase by to stop you buying another property?
eMoov then asked how much rates would have to increase by to stop them from climbing the ladder. With affordability still at an almost record low, nearly half (49%) of homeowners would have to see an increase of 2% or more before they were deterred. 15% would have to see rates climb by up to 1.5%, 18% by up to 1% and 12% by just 0.5%.
The 55+ age bracket is best placed as a result of years of continued property price growth, with 71% needing to see a 2% or more increase before being put off.
Mortgage Length and Fixed Rate Availability
55% of UK homeowners believe the available length of mortgage agreements should be increased, while 45% also think the variable rate mortgage should be scrapped.
Encouraging signs that while many on the first rung or two of the ladder have only just experienced their first increase in interest rates as homeowners, the majority have weathered the financial implications and the marginal hike has made it easy enough to do so.
Market confidence remains high but understandably there is some trepidation among the younger generation of homeowners, who will have heard horror stories of consistent hikes and double-digit rates, and as a result, may be treading with caution after seeing their first increase.Russell Quirk