28% of Homebuyers Forced to Abandon Purchase Plans if Cost of Lending Increases

New research has found that 64% of homebuyers are worried that the cost of borrowing could rise following a thirteenth consecutive interest rate hike this week, with a quarter stating they would need to pull out of their current purchase as a result, while 28% would abandon their plans to purchase completely.

The survey over over 1,000 current UK homebuyers, commissioned by Nested, found that 54% are already struggling with the high cost of homeownership in the current market.

Finding a house they liked within their price range was the primary challenge, with the potential cost of their monthly mortgage payments also proving a significant hurdle, along with their ability to accumulate a mortgage deposit.

66% stated they were worried that the Bank of England could increase interest rates tomorrow for the thirteenth consecutive time since they first started to rise in December 2021.

64% also stated that they were worried that this could cause mortgage rates to follow suit, further increasing the cost of climbing the ladder.

Should this fear become a reality, 48% of current buyers would need to reassess their position in the market before pushing forward with a purchase.

A quarter stated they would also have to pull out of a current property purchase if their mortgage rate was to increase, while half (51%) would have to borrow less or look at more affordable properties.

However, 28% stated that they would have to abandon their plans to purchase completely should the cost of borrowing increase any further.

Alice Bullard, Managing Director at Nested, the modern estate agent, commented:

“There’s a strong likelihood that we could see a thirteenth consecutive rate hike tomorrow and for the nation’s homebuyers, it will seem like the increasing cost of borrowing is never ending, pushing their plans to purchase that little bit further out of reach.

For those currently looking to buy the important thing is not to panic.

While rates are climbing, the mortgage market turbulence seen following last September’s mini budget has subsided and there remains a wide range of product options available.

It’s also important to note that while you may find the cost of borrowing has increased compared to the rate given when securing a mortgage in principle, this isn’t always the case and you may even find a better rate elsewhere.

So stay calm, talk with your lender and once you’ve assessed your position in the market, you can assess the property stock available to you.”