62% of homeowners expect mortgage rates to increase in next six months, according to Equifax research
New research from the credit checking organisation Equifax has revealed that homeowners are anticipating an increase in mortgage rates before the end of the year.
Almost two thirds (62%) of those surveyed said that they think lenders will increase their mortgage rates over the next six months. Interestingly, though, only 1 in 10 said that they are planning to remortgage in the next 6 months to reduce the risk of their monthly repayments going up should there be a rate rise.
Andrew Webb, head of Equifax Personal Solutions explains: "This could, of course, be because many have fixed rate deals that will protect them in the short term. But, with new affordability rules now in place, it's important that homeowners plan ahead for when they are looking to change their mortgage. Their credit information, along with their spending behaviour on an assortment of other outgoings, will be scrutinised much more closely by lenders than it has in the past."
When asked what types of information they think will be considered as part of mortgage applications as a result of the new affordability rules imposed by the Mortgage Market Review, there was a relatively good awareness amongst the homeowners surveyed that lenders would want to have a much better understanding of all types of spending as well as income.
Nearly two thirds (65%) expect their utility bills and council tax to be taken into account in the assessment process and over half expect childcare costs such as nursery fees and child minders to be considered. Nearly half (48%) expect their mobile phone bills to be examined and expect to be asked about any long-term changes to their income and retirement plans.
The personal touch is the preferred route for the majority of homeowners, whether it's applying in person at their bank or building society (39%), or using an independent financial adviser (30%) to assist with the application. There's also recognition of the importance of their credit information in the application process, with just over three quarters saying they have already or will obtain a copy of their credit report before they apply for a new mortgage.
Webb continues: "With over three quarters (77%) of respondents to our research saying that they think it will become harder to obtain a mortgage in the future, it's absolutely essential that people think about their finances and credit information well ahead of making new applications. Homeowners may well find it useful to look at their credit report six months or so ahead of making applications for a new mortgage, to gain an overview of their financial commitments and enable them to prioritise some payments and make savings on outgoings."
Stay tuned for our upcoming interview with Brian Murphy, head of lending at the Mortgage Advice Bureau to find out more about the changes imposed by the recent Mortgage Market Review (MMR),