
More than two-fifths (43%) of first-time buyers are not confident on what their current mortgage interest rate is, a study reveals.
Research, undertaken by Barratt Homes and The New Homes Group managing director Terry Higgins, shows that 43% of FTBs are also unaware how interest rates affect their mortgage payments.
In addition, it found that a third (37%) are not familiar with how interest rates are determined.
It highlighted that half of those aged between 21 and 30 had no knowledge at all – making this the age group with the greatest knowledge gap.
When asked about different mortgage types, 16% also could not explain the difference between a fixed-rate and adjustable-rate mortgage.
Barratt found that according to Google, searches for “what happens when interest rates are cut” surged by 5,000%, while questions about whether rates are rising or falling increased by 70% in the past 12 months.
Commenting on how interest rates affect different mortgage types, Higgins explains: “When interest rates are low, borrowing is cheaper, which can make larger loans more appealing. But when rates rise, borrowing becomes more expensive, so you may need to adjust your loan size or consider a different mortgage to keep payments affordable.”
He adds: “Preparation is key, and taking the time to get your finances in order and understanding your options will pay off when it comes to finding the best rate for your mortgage.”