For Paul Hampton (pictured top), owner and mortgage consultant at Approved Mortgage Solutions in Sunderland, the headline numbers only tell part of the story. “The interest rates at the moment are normal,” he told Mortgage Introducer. “We’ve had artificially low rates for the last 20 years, but that’s all.”
He pointed out loan sizes in his region are typically smaller, softening the impact locally even where borrowers face proportionally large rate increases elsewhere in the country.
Why don’t the Bank’s figures tell the whole story?
Hampton believes official projections underplay how households actually respond once affordability tightens. “All of the data, from what I can tell, assumes no change in personal habits,” he said. “Your personal habits change based on affordability. If you were struggling to pay your mortgage, you wouldn’t go to Costa twice a week.” He estimated most people could typically find around £150 a month in savings from non-essential spending if they had to.
Hampton illustrated the point with a recent case, where a client coming off a 10-year fix at 2.99% onto a new deal at 4.39% saw a real-terms increase of just £15 a month, because the outstanding loan was only £20,000. He also pointed to how mortgage terms themselves can be used as a buffer against rate rises. “Your mortgage term is a very powerful tool,” he said. “When interest rates are low, take your mortgage over a shorter period and overpay it. That gives you a little bit of flexibility so that if interest rates do increase, you can add a year or two onto your mortgage and that softens the blow.”
On the specific cohort facing the steepest rises – the sub-3% borrowers coming off deals this year – Hampton said early engagement is critical. Brokers, he explained, try to get ahead of lenders’ own contact windows: “If a lender contacts the clients three months in advance, we’d contact them four months in advance. If the lender contacts them four months in advance, we contact them five months in advance.”