Although Rising Interest Rates Are a Growing Concern, There Are Options for Homeowners
March 01 2018 - 11:00AM
Business Wire
HSBC Global Research Shows More than 3 in 4
Mortgage Holders Have Not Experienced a Rate Rise on their Current
Mortgage
The end of the low interest rate environment could cause
adjustable mortgage rates to change for many homeowners in the U.S.
and around the world according to HSBC’s new survey, Beyond the
Bricks - The Value of Home. Nearly nine in ten U.S. homeowners
(87%), have not experienced a rise in the interest rate of their
mortgage/home loan during the time they have had it.
“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, N.A. “The average
U.S. homeowner is already spending almost 40 percent of their
monthly income on their mortgage. When you factor potential
interest rate rises into household budgets, making that monthly
payment could become a struggle. This is why it’s important for
current and potential homeowners to be aware of how the current and
forecasted interest rate environment could impact their mortgage,
conduct adequate due diligence when researching mortgage rates and
partner with an institution that can help them navigate
changes.”
In the U.S., 24 percent (22% globally) say that a two percentage
point increase in their mortgage/home loan interest rate would
cause them to struggle or not be able to afford their mortgage
repayments; this figure rose to 45% (versus 47% globally) for a
five percentage point increase.
“The good news is that U.S. homeowners are well-informed about
their mortgage,” said Sanchez. “With roughly 8 out of 10 U.S.
homeowners aware of both how much interest they are paying as well
as the terms of their loan (81% and 79% respectively), now is the
time for homeowners to adequately prepare should interest rates
continue to rise. At HSBC, we aim to build transparent and
proactive partnerships with our clients so that they know what
options are available to them if their mortgage rates rise.”
The figures in this study also reflect high levels of
expenditure on homeownership, with mortgage holders spending on
average 39% (versus 38% globally) of their monthly income on their
mortgage. Additionally, affordability for U.S. respondents
continues to be a challenge for those looking to buy a home, with
70% (versus 80% globally) finding it difficult to save for a down
payment.
Most prospective buyers (73%) plan to pay up to 20% of the
purchase price as a down payment to secure a mortgage and will
largely rely on their regular savings (72%) to help them achieve
this. U.S. homeowners who hold a mortgage took an average of four
years to save for their deposit, with those in France taking
longest to save up (7 years). By comparison, those in the U.K. took
only 3 years to save for their down payment.
“Despite affordability challenges and the prospect of rising
interest rates, many people are willing to stretch themselves to
some extent financially to afford a better home,” said Raman
Muralidharan, Head of Mortgage for HSBC’s U.S. Retail Banking and
Wealth Management business. “At HSBC we’ve made substantial
investments into our mortgage business that are aimed to offer
clients a world class experience with highly competitive rates. For
our existing mortgage customers facing the prospect of increasing
rates, we offer a highly convenient, low cost and fast rate
modification process to lock in today’s rate on their loan ahead of
future rate increases.”
The survey found that more than half (52%) of homeowners in the
U.S. have switched providers, while nearly half (46%) have
investigated getting a better deal by switching their mortgage. The
appetite to switch provider is primarily driven by a desire to get
a better deal or because of interest rate increases, with 53% (vs.
55% globally) of U.S. mortgage holders citing this as the reason
for their switch. Other reasons homeowners switched included: 19%
(vs. 22% globally) because they moved or bought a new property and
12% (vs. 24% globally) because their existing mortgage deal
expired.
The Value of Home is the second survey in the Beyond the Bricks
series of global research studies into homeownership from HSBC.
Note to editors
Beyond the Bricks is an independent consumer research study into
global homeownership, commissioned by HSBC. It provides
authoritative insights into peoples’ attitudes and behavior towards
home buying, renting and funding around the world. The value of
home survey represents the views of 10,005 people in 10 countries:
Australia, Canada, China, France, Malaysia, Mexico, Singapore,
Taiwan, UK and USA. The findings are based on a survey of current
and prospective homeowners aged 21 or older from a nationally
representative online sample in each country. The research was
conducted by Kantar TNS in September and October 2017.
HSBC Holdings plc
HSBC Holdings plc, the parent company of the HSBC Group, is
headquartered in London. The Group serves customers worldwide from
around 3,900 offices in 67 countries and territories in Europe,
Asia, North and Latin America, and the Middle East and North
Africa. With assets of US$2,522bn at 31 December 2017, HSBC is one
of the world’s largest banking and financial services
organizations.
HSBC Bank USA, National Association (HSBC Bank USA, N.A.)
serves customers through retail banking and wealth management,
commercial banking, private banking, and global banking and markets
segments. It operates bank branches in: California; Connecticut;
Delaware; Washington, D.C.; Florida; Maryland; New Jersey; New
York; Pennsylvania; Virginia; and Washington. HSBC Bank USA, N.A.
is the principal subsidiary of HSBC USA Inc., a wholly-owned
subsidiary of HSBC North America Holdings Inc. HSBC Bank USA, N.A.
is a Member of the FDIC. Investment and brokerage services are
provided through HSBC Securities (USA) Inc., (Member NYSE/FINRA/
SIPC) and insurance products are provided through HSBC Insurance
Agency (USA) Inc.
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version on businesswire.com: http://www.businesswire.com/news/home/20180301006008/en/
HSBC media:Matt Klein,
212-525-4644matt.klein@us.hsbc.comorSteve Goewey,
212-525-5677stephen.x.goewey@us.hsbc.com
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