Homeowners worry rising rates will cost them £600
Over half (55%) of all homeowners are worried about the impact of rising interest rates on their mortgage repayments and expect to pay £600 more a year.
On average, they believe their repayments could increase by £590 a year if mortgage rates rise by 0.5 percentage points, according to research conducted by comparethemarket.com.
In a bid to cushion the blow, some 5% said they were currently overpaying their mortgages while rates remain low.
The comparison site also found that homeowners are increasingly looking to remortgage to secure historically low mortgage rates while they're still available.
Remortgaging enquiries currently account for 42% of all mortgage enquiries, whereas "under more normal market levels", comparethemarket would expect remortgaging to comprise more like 20% of enquiries.
However, a third of those homeowners surveyed said they were "unaware" of the likely rise in interest rates, after it emerged last week that two of the Bank of England's Monetary Policy Committee members voted for a rise in the base rate for the first time in more than three years.
Meanwhile, a quarter of those polled said they were "unaware" of how interest rate rises might affect them and some two-thirds have taken no action either to lessen the impact of future rises or take advantage of current low rates.
For example, only 11% of respondents said they were looking to repay existing loans early to avoid rising interest rates.
Nothing last forever
Simon McCulloch, director of insurance at comparethemarket.com, said: "Low interest rates may have spelled bad news for savers since 2008, but mortgage-paying homeowners have really benefitted. Our research has shown that, on average, mortgage repayments have been £112 less per month for every household since 2008.
"However, nothing lasts forever and, with the potential interest rates rise just around the corner, it's good timing for those with mortgages to start shopping around to secure the best rates ahead of the rise."
Changing mortgages without moving home. Property owners chiefly remortgage to get a better deal but some do so to release equity in their homes or to finance home improvements, the costs of which are added to the new mortgage. Even though you’re not moving house, you still need to engage solicitors, conveyancing and the new lender will require the property to be surveyed and valued.
Monetary Policy Committee
A committee designated by the Bank of England to regulate interest rates for the UK. The MPC attempts to keep the economy stable, and maintain the inflation target set by the government and aims to set rates with a view to keeping inflation at a certain level, and avoiding deflation. The MPC meets on the first Thursday of each month and discusses a variety of economics issues and constitutes nine members: the governor, the two deputy governors, the Bank’s chief economist, the executive director for markets and four external members appointed directly by the Chancellor.
Also referred to as the bank rate or the minimum lending rate, the Bank of England base rate is the lowest rate the Bank uses to discount bills of exchange. This affects consumers as it is used by mainstream lenders and banks as the basis for calculating interest rates on mortgages, loans and savings.