Roughly 46% of mortgage holders have expressed their unease over a 3% interest rate hike on their home loan, admitting they would struggle with monthly repayments, according to new figures from renowned specialists.
Ocean Finance recently conducted a poll through which it discovered almost 1 in 10 homeowners would have to significantly increase their workload in order to combat climbing repayments. More startling than this, just under 1 in 10 would put their house on the market straightaway.
These figures arrive amidst a growing consensus amongst financial authorities that the UK is undergoing a period of economic growth. However, those struggling with mortgage repayments are relying on the current steady base rate to provide them with some breathing room. The thought of being plunged into even murkier pools of debt must seem unthinkable.
The Bank of England has suggested it will raise its interest base rate to 2.5% by the start of 2017, although Mark Carney has emphasised the approach they take will be ëgradual and limitedî. However, this will be of little comfort to many ailing homeowners, as they continue to combat slow annual wage increases in line with inflation and a general mounting cost in living.
Ian Williams, representative of Ocean Finance, appeared reflective on the issue noting that whilst it is probable interest rates will be risen progressively, the publicís pessimism regarding the interest rate hike gives cause for concern.
Mr. Williams said: ìClearly it is likely to take a while for rates to rise by three per cent.î
ìBut if they do go up by that much over the next couple of years it’s worrying to hear that so many mortgage borrowers are concerned about how they would keep up with the repayments, especially when one in 10 are already behind with them.î: He added.
State of Rental Market
Recent updates to the English Housing Survey, exposed the hefty amounts tenants pay on a monthly basis when compared with homeowners. Private renters effectively expend 2 daysí salary on rent compared with homeownersí spending of 1 daysí wages on mortgage repayments.
The significance of this, is that the majority of renters do so due to their inability to take out a mortgage in the first place due to their dearth of financial viability.
Fledgling families have no choice but to rent, as highlighted by the 20% of private renters that are made up of couples with young children. This figure has risen by almost twofold since 2008, suggesting that the low interest rates enacted following the financial crisis, mainly to aid low-income individuals and families tackle high levels of debt, have done nothing to inspire consumer confidence in the housing market.
Escalating housing prices since then certainly play a part, with renters expressing dissatisfaction at their living circumstances. 48% of tenants believed their current living situation was inadequate whereas by comparison, a mere 7% of homeowners express similar discontent.
Campbell Robb, Shelterís chief executive said: ìHaving a place to call their own is becoming a distant dream for people.
ìFamilies have no choice but to bring up children in unstable and expensive privately rented homes
Given the number of households currently bemoaning what an interest rate hike could do to their mortgage repayments, any aspirations tenants might have of becoming homeowners look increasingly unlikely in the short term due to the Bank of Englandís impending base rate hike.
State of homelessness
Families numbering in the thousands have been trapped in Emergency housing in London alone for years now, according to data gathered by Shelter, the homeless charity.
The data showed that over half of the homeless families that responded have been residing in hostels and B&Bs for over a year, whilst 41% of the sample have endured temporary accommodation for over 2 years.
Campbell Robb, Shelterís chief executive, said: “It’s appalling that in one of the wealthiest cities in the world there are forgotten homeless children, hidden from view in temporary accommodation that offers them no stability and that can be unsafe and in poor condition.
“And sadly, with more people struggling to make ends meet, weíre bracing ourselves for an increase in demand from families who desperately need our help.”
Unfortunately, if families were not able to combat their debt at a time when interest rates were tailored for them to do so, the future looks bleak indeed for the thousands of homeless families living in relative squalor.