According to a poll of over 1,000 mortgagors from Money Expert, people are planning to reduce their non-essential spending to keep up with their payments.
Although mortgage rates have started to fall in recent weeks, they are still higher than they were for people who took out a mortgage at least two years ago. This means people who are due a remortgage could be facing a significant payment shock if they refinance onto a higher rate.
According to the survey, 63 per cent of people are due a remortgage in the next 12 months, and 37 per cent had completed on a mortgage in the last six months.
Some 18 per cent of respondents said their mortgage payments had become unaffordable.
Just 13 per cent were not worried about the rise in payments.
Pinching the pennies
Of those planning to cut back on non-essential spending, 52 per cent said they would dine out less and 46 per cent plan to cut back on holidays. For 42 per cent of homeowners, they will save money by spending less on non-essential clothes and shoes while 35 per cent of respondents will cut back on how much they spend on personal grooming and wellbeing.
Some 28 per cent said they would delay buying a new car.
As for how much disposable income homeowners had before remortgaging, 29 per cent said once they paid for bills and expenses they were left with between £300 and £500 a month.
However, after remortgaging 27 per cent either had or expected to have between £100 and £300 left over after paying bills.
Paul Ford, group commercial director at Fluent Money, said: “Rising mortgage interest rates are undeniably a source of significant concern for homeowners across the UK. The fact that 42 per cent of households are planning to cut back on non-essential spending to meet their mortgage repayments highlights the real financial strain many are facing. Homeowners must now be more proactive than ever.
“At Fluent, we believe in starting conversations with our customers as early as possible, ideally months before their current mortgage deal ends. An early approach allows us to work together to find tailored solutions and ensure customers are well-prepared to face the future with confidence. We find that taking this proactive approach and staying ahead of the curve, helps our customers navigate this challenging financial landscape effectively.”
Liz Hunter, commercial director at Money Expert, said: “Many UK homeowners are having a tough time financially, with issues relating to the cost of living alongside rising costs in energy bills that continue to put a squeeze on household spending.”
Hunter said it was unlikely rates would fall back to ultra low levels soon.
She added: “Rising mortgage rates will be a major concern for many people, particularly those who are coming up to the end of their agreement within the next six months.”
