Latest from Bank of England - Home owners can afford rate rise

The Bank of England has recently announced home owners can afford a rise in interest rates. Only 4 % would need to take any action if the interest rates were to rise from 0.5% to 2.5%, says the Bank’s annual survey of household incomes. This is based on a 10% rise in household income. However, it also said if incomes did not rise then 37% would need to take action.

Such a rate rise would increase home owners gross mortgage spend to 40%, which would put them at greater risk of falling into arrears.

Assuming home owners receive an income rise by 10%, then those struggling to pay their mortgage would increase by one third – to 480,000. If there is no increase in income this number rises to 660,000. On a brighter note, the Bank also said to bare in mind only one third of all houses in the UK actually have a mortgage.

Stewart Property Buyers Team