A quarter of homeowners (26%) have said that they will not be able to afford their mortgage if interest rates go up again, research by data platform, Moneyhub Decisioning, has found.

A further 35% said that they are concerned that they will not be able to afford their mortgage when they remortgage their home if rates continue to rise.

Approximately 1.4 million people in the UK are due to remortgage their homes this year, with 1.5 million estimated to be on standard variable rates. With a further 85,000 are on tracker mortgages, Moneyhub has said that many could be in the red following a further rise.

Research also found that young people are particularly vulnerable to a further rate rise, with almost half (44%) expressing concern about affording their mortgage. Londoners are also at risk, with 51% of homeowners with a mortgage in the capital saying they were worried about potential rises in repayments.

The research results come as predictions suggest that the Bank of England’s Monetary Policy Committee (MPC) is set to raise the base rate again this coming Thursday (22 June).
Open Finance has recently found that the number of households in mortgage arrears rose in the last quarter, showing that it is clear that more needs to be done to support homeowners.

However, lenders often do not know a customer is at risk of default, meaning that support measures cannot be put in place.

Managing director at Moneyhub, Suzanne Homewood, said: “Times are challenging for homeowners. Mortgage rates continue to rise to levels not seen since before the financial crisis and other essential costs are eroding financial buffers, leading to a complex situation and increased risk for both consumers and lenders.

“It’s clear that there needs to be more support for those remortgaging or on tracker or variable rates who will be feeling the impact of rising monthly payments. With Moneyhub’s Open Finance powered Decisioning tools, lenders will be able to better understand their customers’ financial circumstances and offer products that are based on their current and historic spending patterns and behaviours, and therefore what they can actually afford.

“In addition, whilst providers stress-test a customer’s finances at the point of sale, they are not aware if/when a customer’s circumstances change and therefore if the product is still suitable. With the FCA’s new Consumer Duty regulations coming in next month, it’s vital that banks and lenders can prove products that are suitable for their customer across the life cycle of the product. Holistic, timely and relevant communication to those that could be falling into financial stress via Open Finance will support better outcomes, which has to be good for everyone.”

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