UK mortgage customers take proactive measures to combat rising interest rates

A new survey of UK adults who have a mortgage has found:
 

• 25% have switched to a fixed-rate in the past 12 months
• 27% have made early lump-sum repayments in the past 12 months
  • The figure rises to 49% among those on tracker or standard variable-rate mortgages
• 20% have delayed plans to buy a new home in the past year due to higher rates
• 13% have downsized to reduce their mortgage payments

 
UK mortgage customers are turning to fixed rates and lump-sum payments as interest rates rise, according to new research by Butterfield Mortgages.

The prime mortgage provider commissioned an independent survey among 2,000 UK adults, 667 of which have a mortgage. It found that 27% of mortgage customers in the UK have made one or more early lump-sum repayments over the past 12 months to reduce the size of their mortgages.

This figure rises to 49% among borrowers on tracker or standard variable-rate mortgages. In addition, a quarter (25%) of those with a mortgage have re-mortgaged since June 2022 to secure a fixed rate.

Since December 2021, the Bank of England has raised the base rate from 0.1% to 5.0%, and rates are expected to peak at 5.75% later this year.

Signalling that the high interest rate environment has caused some people to adjust their investment strategies, the survey reveals that 20% of borrowers have delayed or abandoned their plans to buy a new home in the past year due to higher rates, while 13% have downsized or moved to a cheaper property to lower their mortgage repayments.

However, a larger proportion (22%) of existing mortgage customers have actually accelerated their home-buying plans to get ahead of any further interest rate. When asked about their outlook on interest rates, only 44% are confident that they are nearing their peak and borrowing costs could ease in the coming 12 months.

Butterfield Mortgages’ research also reveals that the majority (67%) of borrowers believe the mortgage market is still feeling the adverse effects of last September’s mini-budget under Liz Truss.
 
Alpa Bhakta, CEO of Butterfield Mortgages, said: “There’s no denying that borrowers have had to navigate a particularly complex mortgage landscape over the past 12 months. 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 home-buying 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.”