More than one in three homeowners fear that a rise in interest rates will push them into financial difficulties, a report has warned.
Some people said they would struggle to find money for food, while others said they may have to sell up and rent as and when there was any hike in interest rates, according to the study by consumer group the HomeOwners Alliance and conveyancing provider Myhomemove.
The research found that 34% of people were worried that a rise in interest rates would mean they faced a tougher struggle to afford payments on their mortgage or other bank loans and debts, equating to 5.8 million homeowners if the findings were projected across the UK.
Younger homeowners were found to be more fearful of interest rate rises, with nearly half (49%) of 25 to 34-year-olds saying an increase would put them in difficulty, compared with under one quarter (24%) of people aged over 55.
The report quoted one person who took part in the study saying: “At the minute we can just about pay off (the) mortgage and bills with very little spare for food; with increased rates we would struggle to find money for food every month.”
Another participant told the study: “I have other debts on top of my mortgage. I will probably be forced to sell and rent.”
The report found that while some older homeowners would welcome the impact that interest rate rises could have in getting them a better return on their savings pots, they were also concerned about the effect on younger people with debt.
One older homeowner told the report: “For me it will not have an impact as I will complete my mortgage soon.
“However I am very fearful for my adult children and society at large.”
On a regional basis, the survey of more than 2,500 people, of which around 1,600 own their property, found that homeowners in the east were the most concerned about a rise in interest rates, with 47% of people there saying an increase would make life more difficult.
The findings come amid mounting speculation that further steps could be taken to calm the housing market.
The Office for National Statistics (ONS) reported this week that house prices had jumped by 8% over the last year across the UK to reach around £252,000, and in London they had surged by 17% to £459,000 on average.
Bank of England governor Mark Carney recently indicated he was ready to take action to cool the market amid concerns over the threat a new property price bubble could pose to the wider economic recovery.
Mr Carney signalled the bank could adopt a range of measures, including imposing a new “affordability test” for borrowers and advising the Government to rein in its Help to Buy scheme, which helps people with 5% deposits to move on or up the property ladder.
The Council of Mortgage Lenders (CML) said that it expects any possible steps to limit the housing market will be “careful” and “proportionate” rather than causing any dramatic change.
Paula Higgins, chief executive of the HomeOwners Alliance, said: “Homeowners are already struggling to make ends meet, and millions could be pushed into real finan-cial hardship when interest rates start to rise.
“It shows just how severe the cost of living crisis is that a rise in interest rates could lead to some homeowners struggling to afford food or being forced to sell their homes.
“The Bank of England needs to tread very carefully to avoid causing widespread financial difficulties.”
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