Families cutting back on costs as mortgage rates rise

mortgage rates rise

Mortgage rates increased sharply amid market turmoil following the mini-budget and many products were pulled from sale

Homeowners are being forced to cut costs in order to keep the roof over their heads as mortgage rates rise.

Mortgage rates increased sharply amid market turmoil following the mini-budget and many products were pulled from sale.

Rates offered on home loans have been on the rise generally in recent months, following a string of Bank of England base rate hikes.

Joanna Elson, chief executive of the Money Advice Trust, told the Treasury Committee that people’s homes tend to be ‘the last thing they give up’, so they cut back on other outgoings to keep the roof over their heads.

Renters and buy-to-let investors could also be hit by rising mortgage rates, with potentially serious impacts on the availability of homes to let.

Chris Rhodes, chief finance officer at Nationwide Building Society said: If you need a mortgage and you need an LTV (loan-to-value) anything above 50% or 60%, with the current stress rates it’s going to be very difficult.

And the knock-on effect of that, combined with some existing landlords selling because of the more onerous tax regime and other regulatory requirements and higher mortgage rates I think is going to have a quite serious impact on the availability of rental property over the course of the next year or two, he said.

Homeowners are preparing to be hit by the biggest jump in interest rates since Black Wednesday as the Bank of England prepares to put its foot on the accelerate to tackle double digit inflation.

Ray Boulger, senior mortgage technical manager at broker John Charco, said: I think the buy-to-let market is where we’re likely to see a lot more stress than the residential market. This will impact renters as the lack of supply will raise rents for those looking to become tenants.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Getting Money Wise. The information provided on Getting Money Wise is intended for informational purposes only. Getting Money Wise is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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