One in three UK mortgage customers fear unaffordable repayments due to rate hikes

The independent survey of 2,000 UK adults found that a third (33%) of mortgage holders believe the interest rate hikes over the past year have made their mortgage repayments unaffordable. Among younger mortgage customers (18-34), the figure rises to 48%.

Since December 2021, the Bank of England has made six consecutive hikes to interest rates, with the base rate rising from 0.1% to 1.75% in the past nine months. On Thursday (22 September), Monetary Policy Committee is expected to increase rates by 0.75 percentage points to 2.5%.

Butterfield Mortgages’ research showed that rising interest rates top many mortgage customers’ financial concerns – 44% said they are more worried about rates than inflation. A similar number (42%) said they are considering switching to a different mortgage provider offering a longer fixed-term mortgage.

Over half of UK mortgage customers (53%) feel locked in with their current mortgage provider, while more than a quarter (27%) are actively shopping around for a new mortgage.

The study also uncovered a desire for greater support from lenders to help navigate the current economic landscape. Less than half (45%) of respondents believe their mortgage provider has been proactive in providing guidance or communication about the implications of rising interest rates.

Alpa Bhakta, CEO of Butterfield Mortgages, said: “Borrowers are facing sharp shifts in the economic landscape. Our research has shown the extent to which six consecutive interest rate hikes by the Bank of England have impacted mortgage repayments and people’s wider financial concerns.  

Bhakta continued: “As lenders, we must do everything we can to help mortgage customers navigate the best possible financial path through these mounting challenges. This includes taking proactive steps towards anticipating borrowers’ evolving needs and offering greater flexibility with long-term and fixed rates, which may provide a sense of security over the potentially uncertain times ahead.”