Borrowers can withstand rate rises

The majority of mortgage holders can withstand multiple rate rises in the next couple of years, UK Finance’s analytics manager James Tatch has concluded.

However he raised concerns over those who don’t have any savings or investments to offset the rise, or those who are borrowing money in other ways.

Tatch wrote on the UK Finance website: “While borrowers are unlikely to welcome higher rates, most look well placed to withstand rate increases higher than anything that is likely over the next couple of years.

“But, of course, consumers do not take out mortgages in a vacuum – many will have other loans, savings or other investments, all of which are affected by rate rises, just as mortgages are.

“For those with high savings, the benefits may outweigh the additional mortgage costs. But for those with significant other borrowings, the reverse will be true.”

The Bank of England has reassured that when interest rates rise, it will happen slowly.

In June three members of the Bank’s Monetary Policy Committee voted to increase interest rates from 0.25%.

With interest rates being 0.50% or lower since 2009 Tatch seemed to think the biggest danger is complacency.

He added: “We are in a world where many borrowers – including around 2.4 million who took out their first mortgage in the last 10 years – have never experienced a Bank rate rise as a mortgage borrower.

“And while the vast majority of these will have come to the end of at least one deal rate, most will have then refinanced on to another deal reflecting the continuing ultra-low rate environment, or simply continued on an SVR which, in many cases, will itself be fairly attractive.

“Because of this, there is a risk of complacency – that some will not have factored this in to their financial planning.”

Free Property Ad – Reach millions buyers & tenants

Mortgages – Find cheapest rates from 0.98%

Landlord tax – How to save £1000s using a company

Broadband & TV – Compare Sky BT Virgin & Plusnet

Gas & Electric – Save up to £600+ in  10 minutes

mortgageMortgages - Find cheapest. Rates from 0.98%. 1st time buyers, remortgages, self-employed, adverse & CCJ, Landlord buy to let. Compare now

mortgageSell or Let Property FREE on Houseladder 0% no fees. Free property advertising. List 1 to 1000 properties to millions of buyers and tenants. Upgrade to a Premium advert for only £30 and sell or let your property FASTER! Create Ad

make-moneyMake Money - Earn £250 to £2000+ per month part time. Get paid every month for work you do once. Work from home. Flexible hours. Free training. No experience needed. Major UK PLC company. Find out how >>

taxHow To Save Property Tax - Updated Sept 2017 “How To Save Property Tax” is widely regarded as THE tax bible for property investors. The 21st edition has just been published (Sept 2017) and is completely up to date. Read now

Written by: Houseladder