A quarter of the population has seen housing costs rise in the past three months, with rising rents and mortgage rates putting pressure on household finances
- More than a third expect housing costs to rise over next year, Ipsos says
- Survey shows 27% of renters now spend half or more of their income on housing
A quarter of UK adults have seen the cost of their mortgage or rent rise in the past three months, with those aged 18-34 most likely to be affected.
Meanwhile, only 3% of people have seen their rent or mortgage payments drop during this time, according to new research from Ipsos.
More than a third expected their housing costs to rise – or rise further – over the next 12 months, with almost half of 18-34 year olds expecting an increase.
By comparison, just under a quarter of 55-75 year olds expect their rental or mortgage costs to rise – perhaps because more of them are likely to own their own House.
Rise: A quarter of adults have seen their housing costs rise in the past three months
Renters are also more likely than mortgage holders to spend at least half of their monthly income on housing.
Nearly a third (27%) of renters spend at least half of their income on housing, compared to just 17% of mortgage holders, Ipsos said.
However, those with mortgages are seeing the costs rise. Mortgage rates soared late last year in the wake of the September mini-budget, with the two-year fixed average hitting 6.5%.
How much do mortgages and rents cost now?
Although mortgage rates have slowly come down, they are expected to stabilize between 4 and 5%, which will cause more than 1.4 million people to face mortgage shock this year when their current fixed loan comes to an end.
Meanwhile, the average rent outside London has hit a record £1,172, according to Rightmove, an increase of 9.7% in 2022.
Rightmove predicts that rents will rise another 5% in 2023 unless there is a “significant addition of housing available for rent”.
Making ends meet: More than a quarter of people have had to cut spending to pay their rent or mortgage
The Ipsos survey found that 26% of people had to cut spending to meet mortgage or rent costs, while a further 19% had thought about it.
Two-thirds say they would be willing to cut spending if it meant being able to buy a home, whether as a first-time homebuyer or in a new property. Only 17% say they wouldn’t make the switch.
Nearly four in 10 (39%) said they never thought they would be able to buy a home and almost half (49%) said they could only afford a home if they inherited the parents’ money.
Reduce: Almost two-thirds of respondents told Ipsos they would cut spending if it meant they could buy a new home
A quarter of young workers can now expect to inherit more money than they will earn over a 40-year career, according to new analysis from mortgage broker Tembo.
An estimated £5.5trillion will be passed on from wealthy parents to their children in the form of bequests and gifts over the next 30 years.
In one of the biggest wealth transfers in history, more than three million people in the UK whose parents are over the age of 65 are now set to receive an inheritance of more than a million pounds sterling each over the next three decades.
What to do if you need a mortgage
Borrowers who need to find a mortgage because their current fixed rate contract is coming to an end or because they have agreed to buy a home should explore their options as soon as possible.
This is Money’s best mortgage rate calculator, powered by L&C, that can show you deals that match your mortgage and property value.
What if I need to remortgage?
Borrowers should compare rates and speak to a mortgage broker and be prepared to act to get a rate.
Anyone with a fixed-rate deal ending in the next six to nine months should consider how much it would cost them to remortgage now — and consider entering into a new deal.
Most mortgage transactions allow fees to be added to the loan and they are then only charged at the time of subscription. By doing so, borrowers can secure a rate without paying costly arrangement fees.
What if I buy a house?
Those who have agreed to buy a home should also aim to get quotes as soon as possible, so they know exactly what their monthly payments will be.
Homebuyers should be wary of overstretching and prepare for the possibility of home prices falling from their current high levels, due to higher mortgage rates limiting people’s ability to borrow.
How to Compare Mortgage Costs
The best way to compare mortgage costs and find the right deal for you is to talk to a good broker.
You can use our best mortgage rate calculator to view offers that match your home’s value, mortgage size, term, and fixed rate needs.
Be aware that rates can change quickly, however, and so the advice is that if you need a mortgage, compare rates and then speak to a broker as soon as possible, so they can help you find the loan mortgage that’s right for you.
> Check out the best fixed rate mortgages you could apply for