Yahoo Finance Families cutting back on other costs be able to pay mortgage
Homeowners are being forced to cut costs in order to keep the roof over their heads mortgage rates rise.
Mortgage rates increased sharply amid market turmoil following the mini-budget and many products were pulled from sale.
Rates offered on home loans have been on the rise generally in recent months, following a string of Bank of England base rate hikes.
Read more: Interest rates: What the Bank of England's biggest hike in 33 years means for you
Joanna Elson, chief executive of the Money Advice Trust, told the Treasury Committee that people’s homes tend to be “the last thing they give up”, so they cut back on other outgoings to keep the roof over their heads.
Boulger said: “What we’re seeing now is criteria changes and we’re finding situations where clients are not able to proceed with the amount they originally planned to borrow because of criteria changes.
“It’s not all about rate, it’s rate and criteria, particularly stress test rates, they’ve been changed as a result of rates going up.”
Renters and buy-to-let investors could also be hit by rising mortgage rates, with potentially serious impacts on the availability of homes to let.
Chris Rhodes, chief finance officer at Nationwide Building Society said: “If you need a mortgage and you need an LTV (loan-to-value) anything above 50% or 60%, with the current stress rates it’s going to be very difficult.
“And the knock-on effect of that, combined with some existing landlords selling because of the more onerous tax regime and other regulatory requirements and higher mortgage rates I think is going to have a quite serious impact on the availability of rental property over the course of the next year or two.”
Homeowners are preparing to be hit by the biggest jump in interest rates since Black Wednesday as the Bank of England prepares to put its foot on the accelerate to tackle double digit inflation.
Read more: UK house prices fall ahead of Bank of England interest rates decision
Ray Boulger, senior mortgage technical manager at broker John Charco, said: “I think the buy-to-let market is where we’re likely to see a lot more stress than the residential market.” This will impact renters as the lack of supply will raise rents for those looking to become tenants.
Charles Roe, director of mortgages at trade association UK Finance, said: “Products were available. But lenders were also dealing with a large number of phone calls and requests that came in from borrowers who were concerned about their finances, would they be able to re-mortgage.
Watch: How does inflation affect interest rates?
