Around 1.5mn people are going to have to remortgage at some point in 2024 and “it’s going to hurt”, Hargreaves Lansdown head of personal finance, Sarah Coles, has said.
The firm's Savings and Resilience Barometer for July 2024 found around one in five of those who have had to remortgage onto a higher rate since the end of 2022 have “poor” or “very poor” financial resilience.
This is compared to just one in eight, or 12 per cent, of those who have yet to refinance.
Coles said most are moving from deals costing them less than 3 per cent to rates which were just shy of 6 per cent throughout most of June and July.
As a result, over the next 12 months, they’re likely to be carrying far less affordable debts.
She added those who have already remortgaged have seen a “major blow” to their resilience, with an average of just £315 left at the end of the month, compared to £401 overall, and £410 among mortgage holders who haven’t yet had to remortgage.
However, Coles added that things are “looking marginally brighter” for remortgagers in the coming months.
“Those who have yet to remortgage are likely to be on slightly higher rates than those who have done so since 2022 - and they’re remortgaging onto rates that are down from the peak,” she explained.
“It means the jump in rates is going to be painful, but they don’t have quite the same gap to clear as those who came before them - who faced a rise from less than 2 per cent to more than 6.5 per cent in some instances.”
Renters
However, Coles cautioned the situation is “worse” for renters as, despite the fact their financial resilience has increased in step with the national average since the pandemic, their resilience was lower than those with mortgages “from the start”.
Coles added the percentage of renters with arrears has risen 3.5 per cent and the percentage who are worried by their debts has risen 10 points over this period.
There are certain groups of renters in particular trouble as almost all renters with children among the lowest fifth of earners (99.6 per cent) have poor or very poor resilience.
“While life may get easier for those with mortgages as rates ease, the same can’t be said for renters,” Coles stated.
“They’re still facing rising rents, as tenant numbers keep increasing and landlords continue to sell up.
“It means people need to manage their finances carefully in order to stay on an even keel.”
tom.dunstan@ft.com
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