Rising interest rates are worrying homeowners and UK renters, with more than a quarter in this latter group concerned this may jeopardise plans to buy their own home.

In total 28% of UK renters say rate hikes may stop them getting onto the housing ladder, while 19% of current homeowners said higher interest rates may damage their ability to repay the mortgage.

The survey, by Market Financial Solutions (MFS) found that 18% of respondents were planning to buy a property in 2022. This includes first-time buyers, as well as those looking to move up the property ladder or invest in a second property. 

Two thirds (66%) of these potential buyers said that their plans could be derailed by a combination of interest rate hikes, rising inflation and higher house prices. Meanwhile, 38% stated that the time and complexity involved in securing a mortgage is a major challenge when looking to buy a property.

The Bank of England increase the base rate from 0.1% to 0.25% in December 2021, before introducing a further increase to 0.5% in January this year. 

Specialist mortgage lender MFS CEO Paresh Raja says: “The dual threat of rising inflation and rising interest rates will have serious ramifications on those looking to get onto or move up the property ladder. As the cost of borrowing increases, homebuyers will need to consider the budgets carefully and assess their options.

“Mortgage brokers will continue to play an important role in vetting viable options for homebuyers. But it is important that any buyers – from first-timers to seasoned investors – weigh up their options, particularly with many citing mortgage delays and complications as major issues in the process.”