Many home buyers default if interest rates rise 2%
More than one-fifth of the 10,000 people surveyed said that if interest rates increased by just 2% they would have difficulty or be unable to pay.
According to a new survey in HSBC's "More than a home" research series,75% of people with a home loan have not experienced a single interest rate increase since they started their loan.This survey involved more than 10,000 people in 10 countries and territories (France, USA, UK, Canada, Taiwan, Australia, China, Singapore, Malaysia, Mexico).
The survey also revealed the impact of significant interest rate increases on homebuyers, with 22% saying that if their loan rates increased by two percentage points, they would have difficulty or be unable to make payments. If rates increased by 5%, nearly half of respondents said they would default.
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Many people around the world are worried that rising interest rates will affect their ability to repay their debts when buying a house. Photo: PV. |
In France, 36% of people with a mortgage said they would struggle if interest rates rose by 2%, the highest proportion of any country surveyed, compared to just 13% in China. The French were also the most affected (57%) by a 5% rise in interest rates, compared to 35% in the UK.
Additionally, the survey found that consumers are willing to pay a relatively high price for home ownership.Richard Napier, global head of mortgage lending at HSBC, said that with the average borrower spending nearly 40% of their monthly income on their mortgage, they should consider the possibility of rising interest rates when budgeting for their household and shop around for the best possible interest rate.
Mr. Sabbir Ahmed - Country Head of Personal Financial Services and Wealth Management, HSBC Vietnam, assessed that home ownership continues to be a top financial goal for many people around the world and home loans are one of the solutions to help realize this goal.
However, the survey shows that both prospective homebuyers and existing home loan holders are likely to be significantly impacted by rising interest rates, so it is important that those considering a home loan understand the product and, in particular, the key factors that impact the home loan experience.
