Two thirds unprepared for rate rise
At the same time, only 7% of those polled are considering re-mortgaging their home in the next 12 months.
These findings form part of Legal & General’s latest Mortgage Mood survey, the quarterly study which looks at the attitude of homeowners across the UK on a range of mortgage related issues.
With speculation continuing as to when the base rate will rise, and many commentators suggesting it will be in 2015, lenders have already started to price in the change prior. These findings therefore suggest that borrowers may be missing an opportunity to secure a low interest rate.
Homeowners in the North West are the most financially prepared for an interest rate rise with 39% saying they are planning for one. In contrast, respondents in East Anglia are least prepared, with over three quarters (78%) saying they are not planning for an interest rate rise.
Jeremy Duncombe, director at Legal & General Mortgage Club, said: “It appears that borrowers have not yet woken up to the possibility of a rate rise.
“With rates likely to go up in the medium term, lenders are already starting to price in a change in base rate in advance.
“Therefore, the record low interest rates we have seen in recent times are not going to be around for long. By not preparing or re-mortgaging, homeowners might miss a good opportunity to secure a record low interest rate.”
Further findings reveal that, of those who said they are considering to re-mortgaging their home, the most common reason is to reduce monthly repayments, with nearly a quarter choosing this explanation (18%).
Only 9% cited financing home improvements and just 7% of homeowners said they were considering it to consolidate existing debts.
When asked whether they were considering re-mortgaging their home in the next 12 months, those in East Anglia were the most likely to do so, with 14% saying yes. Homeowners in the East Midlands are least likely to re-mortgage their home, with just 3% saying they are considering it.
Duncombe said: “It is also interesting to note that only a small proportion of people surveyed would re-mortgage in order to consolidate debt or to finance home improvements.
“Following the impact of the financial crisis, it seems fewer consumers are choosing to borrow against their housing equity to fund their spending. In line with this view, the level of housing equity withdrawal has seen a downward trend for the last few years in contrast to the boom years.
“Although it is good to see borrowers exerting more caution, the reality is that there is only one way interest rates can go – and that is up.
“Now is the time for borrowers to consider their options. Speaking to a mortgage adviser is the best way to understand all the options available and to secure one of the good deals that are still around at the moment.”