Those on trackers or standard variable rates have on average outstanding balances of just £124,000 or £77,000 respectively, compared to an average of £159,000 for the typical fixed-rate arrangement. It means stakes are lower for lenders if higher rates force some people to default, but that is cold comfort to households teetering on the edge of affording repayments.
These groups may be a niche case however, and have a chance to help themselves. In a currently fiercely competitive mortgage market, there is opportunity for consumers to lock in low rates before any possible hikes filter through. Research by MoneySuperMarket found the number of mortgage deals with sub-1pc rate has quintupled over recent months, with lenders offering as little as 0.78pc.
Experts are universal in their advice: if in doubt, hire a mortgage advisor.
“Some individual borrowers may push closer to the edge if their income has gone down during the pandemic and doesn’t recover, [but] I don’t think you’re going to see any kind of systematic problems with affordability,” says Mike Scott, an analyst at estate agent Yopa.
Further comfort for the MPC are rules designed to prevent a repeat of mass defaults on mortgages like those seen during the financial crisis almost a decade and a half ago.
Lenders are now expected to stress test mortgage applicants against potential repayment rate increases of up to 3pc – a jump that would require an interest rate upswing that is well beyond the dreams of even the most hardened monetary hawks.
“I’m not seeing any structural risks,” says Kevin Robert, director at Legal & General Mortgage Club. “It’s not like 2007, when we had really poor lending practices.
“The lending that’s going on at the moment is extremely well-regulated and extremely well-disciplined. I don’t think we’re in for any shocks, personally.”
The bigger impact, however, may be on the housing market where prices have long shown vulnerability to psychological factors. It is still reeling from Sunak’s stamp duty holiday, which heaped further upwards pressure after Britons’ lockdown rush for bigger houses and outside space pushed prices higher in many areas.