Homeowners considering downsizing and even renting to avoid rising mortgage costs

A quarter of homeowners are considering selling up and going back to renting amid rising mortgage costs.

New Moneyfacts figures shows the average two-year fixed rate mortgage hit 6.15% yesterday, while a five-year deal is now at 5.79%.

Average mortgage rates were at around 5% earlier this year.

This will hit people remortgaging or getting a mortgage to move house who may currently be on rates closer to 2%.

A survey by The Mortgage Lender has assessed how borrowers are coping with the rising costs.

It found 10% admitted they will be downsizing in order to reduce mortgage costs, and 20% said they are thinking about it.

Some are even thinking about selling completely and going back to renting for the time being, sheltering them from increasing costs. 

Indeed 24% have said they either will do this or are contemplating it. 

That is despite renting probably costing more and tenants also facing rent rises.

Another 45% of borrowers said they either have or are considering paying an early repayment charge on their mortgage deal in order to fix to a reduced rate, while 19% say they are cutting back on spending.

Others are looking into options to boost their income such as finding extra work or taking in a lodger.

Steve Griffiths, head of sales at The Mortgage Lender, said: “It can’t be denied that the cost of living and rising costs are biting, so it’s not surprising that borrowers are looking for ways to save their money. What’s vital is that they seek advice from a professional before making any changes. 

“Encouragingly, we are seeing many people speaking to their brokers or planning to do so. Brokers play a pivotal role in supporting consumers make one of the biggest financial decisions in their lives and can help navigate the market to find the best possible deals that suit individual circumstances and factor in true costs.”