UK mortgage customers are turning to fixed rates and lump-sum payments as interest rates rise, according to research from Butterfield Mortgages.
The survey, which was conducted among 2,000 UK adults, 667 of which have a mortgage, reported that a quarter (25 per cent) of those with a mortgage have switched to a fixed-rate in the past 12 months.
In addition, 27 per cent 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 was found to rise to 49 per cent among borrowers on tracker or standard variable-rate mortgages.
Butterfield additionally stated that the high interest rate environment has caused some people to "adjust their investment strategies", revealing that 20 per cent of borrowers have delayed or abandoned their plans to buy a new home in the past year due to higher rates.
A further 13 per cent were revealed to have downsized or moved to a cheaper property to lower their mortgage repayments.
However, a larger proportion (22 per cent) of existing mortgage customers instead said they have accelerated their home-buying plans to get ahead of any further interest rate rise.
When asked about their outlook on interest rates, only 44 per cent are confident that they are nearing their peak and borrowing costs could ease in the coming 12 months.
Butterfield Mortgages CEO, Alpa Bhakta, commented: “There’s no denying that borrowers have had to navigate a particularly complex mortgage landscape over the past 12 months."
Bhakta continued that the research “shines a light” on how mortgage customers are responding and that it highlights that many people are taking proactive measures.
“Against the backdrop of a challenging economic climate, being proactive, staying informed and seeking advice is more important than ever,” he added, “allowing mortgage customers to make sound financial decisions.”
Bhakta added that, for lenders and brokers, clear communication with borrowers about how their rates or products might be impacted by further hikes will be “vital” in the coming months to help them navigate the high interest rate environment “with confidence”.
The research also revealed that the majority (67 per cent) of borrowers believe the mortgage market is still feeling the adverse effects of last September’s "mini" Budget.
tom.dunstan@ft.com
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