Last year, Savills investigated how an interest rate increase could affect homeowners across the country. By looking closely at each area’s average loan-to-value, the estate agent determined which locations were likely to be the hardest hit by interest changes.
It found that mortgage-holders in Dagenham, Tower Hamlets, Harlow, Worcester, Watford and Slough were most likely to face financial uncertainty following a rate increase and in some cases, some homes could be at risk of repossession.
Things are looking slightly less bleak for the average homeowner in Manchester and surrounding areas, though many homeowners are sure to find their budget stretched in the event of interest growth.
Manchester
According to Savill’s data, in Manchester - where the average home value stood at £160,055 at the time of the survey - the average debt amongst owner occupiers with a mortgage was £93,416 and the average LTV was 58%.
Stockport
Mortgage holders in Stockport - where the average property price was £203,989 - owed £112,998 and the average LTV in the area was 55%.
Trafford
Homeowners in Trafford may fair slightly better in the event of an interest rate rise. The average home value in Trafford stood at £259,820 and the average mortgaged homeowner owed £137,340. The typical LTV was 53%.
Salford
Those in Salford are predicted to be hit harder than nearby areas. Although the average home value was just £139,815 and the average mortgage debt was £95,895 at the time of Savill’s research, the average LTV amongst mortgaged owner occupiers was 69%.
Slightly further up North, the average LTV in Blackburn was 86% and in Burnley it stood at 88%.
Savill’s also looked at the average outstanding loan vs average income. Areas in the North West were in a much better position than those in the south. In Manchester, the estimated loan to income (LTI) is 1.98, with the average mortgage of £93,416 being less than double the average household income (for two adults) of £47,252.
With financial experts predicting an interest rate rise in the coming weeks, homeowners across the country could potentially save thousands of pounds by locking themselves into an affordable fixed rate deal. Interest rates are currently at an all time low, making this an ideal time for mortgage holders to fix their mortgage and ensure their repayments stay at a set level for a specified period of time.
If you’d like to weigh up your options and find an affordable mortgage deal for you, please get in touch with the team at TaylorMade. We can help you find the right product for you before guiding you through the entire remortgage application process, so whether you’re looking for a mortgage broker in Manchester or financial advisors in Stockport, we can help.
Take a look at our guide Everything You Need To Know About Interest Rate Rises to learn more about remortgaging your property to protect yourself from higher expenses.
