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Research reveals widespread confusion over interest rates among UK home owners
Whilst January is traditionally the time to get finances in order and plan for the year ahead, new research reveals that there is widespread confusion around UK interest rates and when they might rise. Some 46% don’t know that the current Bank of England base rate and 88% are unaware of its interest rate forecast for a rise in October 2015, according to research from Barclays Mortgages produced in partnership with the Centre of Economic Business Research (Cebr). Some 61% of home owners are uncertain when interest rates might rise and half with variable rate mortgages aren’t aware their repayments could rise, the research also shows. And overall 76% are not putting money aside to be able to cope with interest rate increases despite the Cebr predicting a minimum total mortgage payment rise of £723.8 million across the UK. The research reveals that home owners cite different political and regulatory statements, conflicting family views and changing market commentary as the main reasons behind this widespread uncertainty. The lack of awareness may contribute to UK mortgage holders experiencing financial difficulties in 2015, according to the research. Just under half, 49.5%, of those with a variable rate mortgage don't expect or aren't sure that their mortgage repayments will rise in 2015, despite the Cebr predicting that home owners across the UK could face a potential £1.1 billion total increase in mortgage repayments by the end of 2015. This is based on the Cebr's 'sharp but potential' model suggesting three rate rises in 201 (taking the base rate from its historic low of 0.5% to 1.25% by December 2015, something which is not considered unfeasible by economic experts and which would increase average mortgage repayments for individuals by £118.974. The second 'medium' model focused on a single interest rate rise of 0.25% in May 2015 and would see home owners across the UK paying an additional total of £904.2 million in their mortgage repayments by the end of 2015 averaging at £101.33 per home owner. At a very minimum the Cebr predicts an average annual £81.12 increase in mortgage payments for individuals by the end of 2015. When looking at the UK as a whole, this 'gentle model' would result in a total £723.8 million annual increase in repayments. The research report says that whatever the increase in repayments, it is clear that people are underprepared for any interest rate rise. The survey also found 45% felt they may have missed out on better mortgage rates and therefore paid out more because they weren't sure whether or not to fix or change their mortgage. ‘Our report shows there is widespread confusion over interest rates and we encourage home owners to review their current situation and get advice on what their next mortgage step should be,’ said Andy Gray, Barclays managing director of mortgages. ‘We want our customers to remain financially fit in the face of potential interest rate rises in 2015, and believe the impending rise that… Continue reading
Funding boost for affordable new homes in London
The Mayor of London has announced his intention for millions of pounds of funding for two new schemes to help Londoners into affordable home ownership and accelerate the delivery of new homes. A shared ownership schemes will help people on low to medium incomes own a home with a boost of up to £180 million through the Mayor's First Steps Challenge Fund and £40 million goes to an innovative housing project where buyers need no deposit. The Fund aims to accelerate the delivery of 4,000 new homes between 2015 and 2020 and is being made available on a recoverable basis so that money can be reinvested to provide more opportunities for affordable home seekers, helping achieve the Mayor's aim of assisting 250,000 Londoners into low cost housing by 2025. The Mayor is also giving up to £40 million of loan finance to Gentoo's Genie for a new innovative housing product where buyers will need no deposit or mortgage to purchase their home and at the end of the agreement customers own 100% cent of the home outright. The scheme aims to deliver 2,000 new homes over the next 10 years, helping people who would struggle to save a large deposit for a mortgage. The Mayor has already made considerable efforts to help Londoners to own their own home with over 50,000 people expected to be helped into home ownership through his First Steps scheme over the course of his two Mayoral terms. He has also moved to remove red tape and bureaucracy in the application and purchase process, providing greater choice and flexibility for purchasers. Alongside steps to improve the mobility options available to existing purchasers of First Steps homes who need to move for family or employment reasons. The Mayor made the announcements as he visited Erith Parkin Bexley, a major new regeneration project, with 80% affordable rent and shared ownership homes. The Mayor joined two families who will be moving into shared ownership homes for their first visit to their new homes. He also met one of the residents of the former estate who moved into her new home in December. The transformation of Erith Park is being delivered by Orbit Group, in partnership with Wates Living Space, London Borough of Bexley and the local community. The Mayor has awarded the project £23 million from his affordable housing funding. The site was formerly known as the Larner Road estate, which originally had a large number of single occupancy flats and suffered from high crime levels, making it undesirable for many local families. The first part of the major regeneration project will deliver 343 new homes, including three and four bedroomed family homes with gardens, with a three bedroom shared ownership house costing approximately £240,000. Erith Park will provide a mix of homes for affordable rent, shared ownership and outright sale and will include 60 of the original households who have chosen to remain in the area. Phase 2 of the scheme will… Continue reading
