Rate rise worry for homeowners

Sarah Pennells, Consumer Finance Specialist, commented:

"Just when it looked like the worst of the cost of living crisis might be over, along comes another hike in interest rates.

"Around a million households are due to come off cheap fixed rate mortgage deals between now and the end of the year, and many face a massive shock to their personal finances when it comes to getting a new home loan.

"The majority will have borrowed at rates below 2%, but now face rates of more than 4% when they look to secure a new deal.

"It’s not just owner-occupiers who are suffering. The impact of rising interest rates has been particularly acute in the private rental sector where tenants have seen a huge spike in rents.

"Many landlords have exited the sector recently and those who remain may feel they have little choice but to pass their increased finance costs onto tenants.

"The result is that private renters are now paying more of their disposable income on housing costs than mortgage holders.

"Rates on savings accounts have been increasing in recent months, but don’t generally rise as quickly as mortgage rates. Anyone with money in a savings account, should check the interest rate they are receiving and see if it makes sense to move their money to get a better rate."