New research from Equifax shows that homeowners are already anticipating an increase in mortgage rates before the end of the year.
62% of homeowners surveyed by Equifax ahead of the introduction of the Mortgage Market Review last weekend said that they think lenders will increase their mortgage rates over the next six months. However, only one in 10 said that they are planning to remortgage in the next sox months to reduce the risk of their monthly repayments going up should there be a rate rise.
Andrew Webb, head of Equifax Personal Solutions, said: “Conducted amongst consumers who have obtained a copy of their Equifax credit report, our research suggests that many homeowners think a mortgage rate rise could happen in the next six months.
“Although, surprisingly, whilst many homeowners believe a rate rise could be on the horizon, only just over 1 in 10 (11%) actually have plans for remortgaging at the moment.
“This could, of course, be because many have fixed rate deals that will protect them in the short term. But, with new affordability rules now in place, it’s important that homeowners plan ahead for when they are looking to change their mortgage. Their credit information, along with their spending behaviour on an assortment of other outgoings, will be scrutinised much more closely by lenders than it has in the past.”
65% expect their utility bills and council tax to be taken into account in the assessment process for a mortgage and over half expect childcare costs such as nursery fees and child minders to be considered. 48% expect their mobile phone bills to be examined.
48% also expect to be asked about any long-term changes to their income and retirement plans.
“With over three quarters of respondents to our research saying that they think it will become harder to obtain a mortgage in the future, it’s absolutely essential that people think about their finances and credit information well ahead of making new applications,” added Webb.
“Homeowners may well find it useful to look at their credit report six months or so ahead of making applications for a new mortgage, to gain an overview of their financial commitments and enable them to prioritise some payments and make savings on outgoings.”
