Over half of UK homeowners are deterred from climbing the property ladder as a result of last month’s interest rate rise, according to the latest research by hybrid estate agent eMoov.co.uk.
The firm surveyed over 1,000 UK homeowners, finding that, while this was the first interest rate hike for just 37% of respondents, 54% of those asked are now deterred from buying another property.
The respondents were asked the following questions:
As a homeowner, is this the first time you have experienced an increase in interest rates?
While it was the first increase for just 37% of homeowners, this climbed to 78% for those aged between 25-35.
London was home to the highest number of respondents seeing a rise for the first time, at 63%, with the North East being the highest region outside of the capital (55%).
Over Half of Homeowners Deterred by Interest Rate Rise
What impact did this have on your monthly payments?
Despite this first for many, when asked what impact it had on their monthly mortgage payments, 64% hardly noticed, while 33% saw a manageable increase. Just 3% believed that it had a serious impact on their monthly affordability.
45-50-year-olds were worst hit, with 5% experiencing a serious impact on their monthly payments, although this rose to 11% for those in both the South West and North East. The increase was least notable in Wales, where 83% of respondents said that they had hardly noticed.
Has the recent increase in interest rates put you off from buying another property?
Despite being the first interest rate rise in over a decade, 46% of those asked remained undeterred from buying another property, with 17% put off from a property sale and 13% putting the idea of a purchase on hold for the time being.
However, those in the first time buyer age bracket seemed more deterred from another purchase, with 56% put off from climbing the ladder – 40% indefinitely and 16% for the time being.
The rise was a put-off in the capital more so than anywhere, where the high price of property means that even a marginal increase can result in a large hike in unaffordability. 60% of homeowners in London were put off from another purchase – 50% completely and 10% for the time being.
How much would interest rates need to increase by to stop you buying another property?
The respondents were then asked how much rates would have to rise by to stop them from climbing the property ladder. With affordability still at an almost record low, nearly half (49%) of homeowners would have to see an increase of 2% or more before they were deterred. 15% would have to see rates climb by up to 1.5%, 18% by up to 1% and 12% by just 0.5%.
The 55+ age bracket is best placed as a result of years of continued house price growth, with 71% needing to see a 2% or more increase before being put off.
Mortgage length and fixed rate availability
55% of UK homeowners believe that the available length of mortgage agreements should be increased, while 45% also think that the variable rate mortgage should be scrapped.
Russell Quirk, the Founder and CEO of eMoov, comments on the findings: “Encouraging signs that, while many on the first rung or two of the ladder have only just experienced their first increase in interest rates as homeowners, the majority have weathered the financial implications, and the marginal hike has made it easy enough to do so.
“Market confidence remains high, but, understandably, there is some trepidation among the younger generation of homeowners, who will have heard horror stories of consistent hikes and double-digit rates, and, as a result, may be treading with caution after seeing their first increase.”