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Consumers worried about interest rate rises

Consumers worried about interest rate rises

Category: Mortgages

Updated: 16/12/2013
First Published: 16/12/2013

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

According to the Building Societies Association (BSA), interest rate rises are the biggest risk to the housing market in 2014 with a lot of householders worried about the impact any increased rates could have.

Over a quarter of those surveyed (or 27%) say that the potential for rising interest rates is their main concern for the year ahead, but they're also becoming increasingly worried about the affordability of mortgage repayments with 46% now saying that this would be a barrier to property purchase, up 11% on September 2013's figure.

However, first-time buyers are more positive about the market compared to three months ago. Raising a deposit is still thought to be the biggest barrier to home ownership but the number of those who believe this to be the case has actually fallen by a third since September – down to 44% from 66% previously – with publicity surrounding the Help to Buy scheme arguably the main driver behind it.

This increased positivity is a welcome sign for the housing market, and there are plenty of great mortgage deals to be found. Incidentally, a lot of householders would be wise to take advantage of the current record-low interest rates – for those who can afford it it's a great time to make mortgage overpayments, thereby reducing the overall mortgage value before base rate rises.

But, homeowners needn't be too concerned about rising interest rates just yet. Even when rates do rise it's likely to be a gradual change and invariably won't happen for at least 12 months, and with affordability checks being a key part of most lenders' criteria any eventual rises shouldn't place too much of a burden on household budgets.


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