A third of homeowners fear interest rate rise

More than one in three homeowners fear that an increase in interest rates will push them into financial difficulties a new survey shows.

A survey of more than 2500 people conducted by consumer group the HomeOwners Alliance and conveyancing provider Myhomemove found that some homeowners believe that a rate rise may mean they will struggle to find money for food forcing them to sell their homes while some aspiring homeowners fear a rate increase will make it harder for them to buy property.

 The research found that 34 per cent of homeowners were concerned that a rate rise would make it harder for them to afford payments on their mortgage or other bank loans and debts.

The report quoted a person who took part in the study saying,“I have other debts on top of my mortgage. I will probably be forced to sell and rent.”

While some people will welcome the impact that higher interest rates could have on their savings the report found that many people especially older homeowners are concerned about the potential impact that a rate hike could have on younger people with debt.

“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” said one older homeowner who took part in the report.

People living in the east of the country were most concerned about a potential rise in interest rates with 47 per cent of people there saying arise would make life more difficult according to the research.

Paula Higgins (left) Chief Executive of the HomeOwners Alliance said, “Homeowners are already really struggling to make ends meet and millions could be pushed into real financial 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.”

Although the Bank of England Governor Mark Carney has indicated that he is ready to take action to cool the housing market amid growing concerns that it is becoming overheated in London he has so far resisted the temptation to raise rates.

But while a rate rise is unlikely to happen this summer Doug Crawford CEO of myhomemove (right) believes that rates could increase later this year.

“Interest rates could begin to rise as soon as November of this year. Christmas could be a tough time for the thousands of homeowners who are already on tight budgets” he said.

Rob Wood Chief UK Economist at Berenberg said that while he expects rates to rise he forecasts that this may not happen until early next year.

“Our interpretation is that the rate setters are resisting the data strength as much they can. They seem keen to resist a hike this year” he said. “But with growth running strong in their forecast surveys showing no signs of growth slowing and unemployment close to 6 per cent by the end of 2015 delaying that hike beyond the first quarter of 2015 would be untenable in our view.”