Research shows many are turning to fixed rates and lumpsum payments
More than a quarter, or 27%, of mortgage holders have made early lumpsum repayments in the past 12 months amid rising interest rates, new research from Butterfield Mortgages has revealed.
The figure rises to 49% among borrowers on tracker or standard variable rate (SVR) mortgages, according to the results of the independent survey among 2,000 UK adults commissioned by the prime mortgage provider.
The survey also found that a quarter of those with a mortgage have remortgaged since June 2022 to secure a fixed rate.
Since December 2021, the Bank of England has raised the base rate to 5.25% from a record low 0.1%. Rates are expected to peak at 5.75% later this year.
The research further revealed that 20% of borrowers had delayed or abandoned their plans to buy a new home in the past year due to higher rates, while 13% had downsized or moved to a cheaper property to lower their mortgage repayments.
However, a larger proportion, or 22%, of existing mortgage customers had actually accelerated their homebuying plans to get ahead of any further interest rate. When asked about their outlook on interest rates, only 44% were confident that they were nearing their peak and borrowing costs could ease in the coming 12 months.
Two thirds, or 67%, of borrowers believed the mortgage market was still feeling the adverse effects of last September’s mini budget.
“There’s no denying that borrowers have had to navigate a particularly complex mortgage landscape over the past 12 months,” commented Alpa Bhakta (pictured), chief executive at Butterfield Mortgages. “Our research shines a light on how mortgage customers are responding – and although often overlooked, the data highlights that many people are taking proactive measures, including making early repayments or bringing forward homebuying plans to stay ahead of further rate rises.
“Against the backdrop of a challenging economic climate, being proactive, staying informed and seeking advice is more important than ever, allowing mortgage customers to make sound financial decisions.
“For lenders and brokers, therefore, clear communication with borrowers about how their rates or products might be impacted by further hikes in the coming months will be vital to helping them navigate the high interest rate environment with confidence.”
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