The findings, published in the Which? Quarterly Consumer Report, reveal a fragile housing market dividing the nation. Half the population are worried about mortgage rates and 26% of people with mortgages fear having their home repossessed.
It says that an increasing gap is developing between older, more financially secure home owners and those who are struggling, namely those who are aged 30 to 49 who bought their homes recently and younger people who can’t get on the property ladder.
Many people in the 30 to 49 age group are so called mortgage prisoners, trapped in their current mortgage deal, unable to switch when rates increase. This group has the greatest housing related costs, spending on average £186 a week, compared with the national average of £135.
The Quarterly Consumer Report also reveals that home ownership is increasingly out of reach for first time buyers with rising rents making it harder for people to save for the large deposits needed. Some 54% of people under 30 who don’t own a home are worried about getting on the property ladder.
Lenders have also increased mortgage arrangement fees, which have risen by around 60% in the past eighteen months to an average of £1,472 in August 2012.
Which? is calling for the Treasury to put tougher obligations on banks taking part in the Funding for Lending Scheme.
‘Our findings, revealing the depth of problems in the housing market, come at a time when banks and building societies are being given access to cheap funds through the Government’s Funding for Lending Scheme,’ said Which? executive director Richard Lloyd.
‘However, more than 1.6 million people with mortgages have been hit by increasing Standard Variable Rates on their mortgages, meaning they are now paying about £400 million a year extra despite the Bank of England base rate remaining unchanged for more than three years,’ he explained.
The consumer organisations wants the government to ensure lenders that have been given access to cheap finance pass this on through lower borrowing costs to help all borrowers, not just those with significant equity.
‘We don’t want to see the Funding for Lending Scheme widen the gap between secure home owners and those who are struggling through no fault of their own. The housing market is failing not just one but two generations of consumers, with many mortgage prisoners trapped on their current deal and young people excluded from the housing market altogether,’ said Lloyd.
‘The Chancellor must put tougher obligations on banks that get cheap finance through the government’s Funding for Lending Scheme so that more is done to help those who are struggling through no fault of their own, and especially to ensure that mortgage prisoners and first time buyers can benefit from lower borrowing costs,’ he added.
The organisation also wants the government to publish its expectations for the scheme, and what safeguards are put in place to ensure that banks pass on cheap funding to consumers.
It also thinks there should be greater transparency from the banks who should publish details of their mortgage lending using the Funding for Lending Scheme and that banks should stop increasing arrangement fees, which have risen by around 60% in the past 18 months to an average of £1,472 in August 2012, to bring down the costs for people to switch to another mortgage deal.
