UK mortgage customers are flocking to fixed rate and lump-sum payments as interest rates rise, says Butterfield Mortgages.
A survey by the mortgage providers found more than a quarter (27%) 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 mortgage. The figure nearly doubles to 49% among borrowers on tracker or standard variable-rate mortgages.
Additionally, 25% of those with a mortgage have re-mortgaged since June 2022 to secure a fixed rate.
The trend follows a successive rise in interest rates since December 2021 from a base rate of 0.1% to 5%, with further rate hikes expected.
Butterfield Mortgages said the high interest rate environment had also prompted people to alter their investment plans, with a fifth of borrowers choosing to delay or abandon their plans to buy a new home over the past year and 13% downsizing or moving to a cheaper property to lower their mortgage repayments.
However, 22% of existing mortgage customers have accelerated their home-buying plans to get ahead of any further interest rate rises with less than half (44%) of those surveyed confident that interest rates are nearing their peak and borrowing costs could ease over the coming year.
Alpa Bhakta, CEO of Butterfield Mortgages, said that the data highlights the proactive approach mortgage customers are taking to navigate the challenging environment.
“Against the backdrop of a challenging economic climate, being proactive, staying informed and seeking advice is more important than ever, allowing mortgage customers to make sound financial decisions. For lenders and brokers, therefore, clear communication with borrowers about how their rates or products might be impacted by further hikes in the coming months will be vital to helping them navigate the high interest rate environment with confidence,” said Bhakta.
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