Most homeowners with adjustable-rate loans could experience their first interest rate increase if the low-interest-rate environment ends, according to survey results released by HSBC. The study revealed that 87% of US homeowners have never experienced a rate increase on their home loan. “From a homeowner’s perspective, we’re heading into unfamiliar territory,” said Pablo Sanchez, HSBC’s regional head of retail banking and wealth management for HSBC Bank USA. “The average US homeowner is already spending almost 40% of their monthly income on their housing payment. When you factor potential interest-rate rises into household budgets, making that monthly payment could become a struggle.”
“The good news is that US homeowners are well-informed about their home loans,” Sanchez said. The survey found that 81% of US homeowners are aware of how much interest they are paying while 79% are aware of their loan terms. Although increasing rates are a concern, HSBC said homeowners continue to have options. Fifty-two percent of homeowners have switched providers and 46% have studied switching their loan to get a better deal. According to the survey, 53% of those who switched were primarily driven by a desire to obtain a better deal or because of increases in their rates. Other reasons homeowners switched included moving or buying a new property with 19% and the expiration of their existing loan terms with 12%. Source: Mortgage Professional America
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