Fewer than one in 10 prospective young home owners are put off by the looming rate hike, a report from Yorkshire Building Society found.
The Bank of England is expected to raise the base rate from 0.25% to 0.5%, with a knock-on effect on mortgage costs, when the Monetary Policy Committee (MPC) meets on Thursday.
Speculation of a rate rise has prompted a flurry of borrowers to fix mortgage costs over the past three months, according to the building society, which includes intermediary-only lender Accord Mortgages.
However, only 8% of people aged 18-40 view higher interest rates as a barrier to owning a home, the lender’s research showed. High deposits were cited as the biggest reason for not buying, followed by expensive house prices.
More than a third of those surveyed were concerned about the cost of property in their local area.
Mike Sims, senior mortgage manager at Yorkshire Building Society, said: “Our research shows that despite general uncertainty about Bank Rate rises and other challenges first-time buyers face, those looking to buy their first house are not being deterred.
“The mortgage market has been in unchartered territory for many years now and even with the prospect of rates rising it’s pleasing to see that many aspiring homeowners still believe owning their own home is in reach.”
Preparing for interest rates to rise
Yorkshire Building Society has seen the ratio of fixed rate to variable mortgage applications shoot up from 35:1 in August to 64:1 in October – suggesting many home owners are preparing for the base rate to rise.
But young adults remain optimistic about the prospect of owning a property. Almost two thirds of 18- to 40-year-olds say it is likely they will become homeowners, according to YBS’s report.
More than half of those surveyed are currently saving money to buy their own home. And more than four in five believe that buying a property will be a good financial investment.
