The UK housing market currently looks ripe with property investment opportunities, but buyers should beware that it could come under threat from rising interest rates. According to the latest Property Tracker report from the Building Societies Association (BSA), 27 per cent of people consider interest rates to be their biggest concern for 2014. Consumers are also becoming more worried about mortgage repayments, with those surveyed claiming they are more concerned today than they were three months ago. Indeed, 46 per cent now claim mortgage repayments are a barrier to property purchase - up 11 per cent from September 2013.
The BSA claims this reflects broader concern about the rising cost of living and an increase in energy bills. However, first-time buyers are feeling more positive about the property market compared to three months ago, despite the fact raising a deposit is still the greatest challenge to owning a home. In fact, the number of people that believe this has fallen by a third from 66 per cent to 44 per cent. The BSA think the government's Help to Buy scheme has had a part to play in increasing confidence among those trying to get on the property ladder.
Paul Broadhead, head of mortgage policy at the BSA, said: "It is understandable that consumers are wary about a rise in interest rates in 2014, but unless the pace of economic recovery picks up considerably, it is unlikely we will see the Bank Base Rate rise over the coming twelve months, and when interest rates do rise, it is likely to be gradual."
He added that there are still plenty of options available for homebuyers looking to get greater certainty over their mortgage repayments. Sixty-nine per cent of mortgage products available are now at fixed rates. What's more, when consumers apply for a mortgage, lenders will generally check that it will be affordable if interest rates were to rise. While this means some will be unable to borrow as much as they originally anticipated, it can help prevent buyers from falling into debt.
Want to learn more about how mortgage legistlation changed over the years? Click here to for an insight into why the housing market is now the way it is.
- Thursday 19 December 2013