UK homeowners say jump in interest rates will force more to sell
ALMOST a quarter of British mortgage holders are considering selling up after the surge in borrowing costs, threatening to pile pressure on the struggling housing market.
Just under a 10th of mortgage holders have already sold and moved to a cheaper property in response to the surge in interest rates, according to a survey released on Thursday (Sep 28) by KPMG.
However, a further 22 per cent are considering moving to a cheaper home as they refinance loans at much higher costs.
The finding is one of the first to suggest there will be a wave of people forced to sell properties they can no longer afford after the Bank of England (BOE) pushed its benchmark lending rate to the highest since 2008.
It adds to concerns that a relatively modest drop in house prices so far has further to run.
While interest rates on home loans have retreated from a 15-year high, borrowing rates on new mortgages are still almost triple their level in early 2022, BOE data shows.
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“This higher interest rate environment is causing between 10 per cent to 20 per cent of mortgage holders that KPMG surveyed to take significant steps to manage these higher costs,” said Linda Ellett, UK head of consumer markets of retail and leisure for KPMG.
“Inevitably, increased household budget and savings being used to pay the mortgage, or higher rent cost, will continue to lead to less money being spent elsewhere within the economy by consumers.”
In a bid to reduce monthly loan repayments, almost a fifth have used savings to reduce their mortgage balance, 16 per cent have switched to an interest-only mortgage and 12 per cent have extended their loan term.
Data from Nationwide shows that house prices slipped back 5.3 per cent in the 12 months to August, the biggest annual fall since 2009. However, economists are expecting the house price slump to continue in the coming months. BLOOMBERG
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