Interest rate hike: Sussex family's life plan 'ruined' as county expected to be among worst affected

The Bank of England raised interest rates for the 13th time in a row from 4.5 per cent to five per cent – the highest since 2008. As a result, millions of people are facing higher mortgage repayments.

It was predicted that Sussex would be particularly hard hit by the interest rate hikes, as the average mortgages in the county are among the highest in the country.

‘It's ruined our whole life plan’

Brighton mum Sophie Bradbury, 25, is among those affected. A self-employed social media manager, Sophie currently rents a home with her accountant partner, Adam, and their two-year-old son.

They had been planning to buy a home in Brighton but, after consulting her mum – a mortgage advisor – Sophie said they decided to ‘put it on hold’.

"We have been renting for years,” Sophie said. “I started my own business and we've been saving for a house.

"We've been looking around and were hoping to move Eastbourne way.

“My son is nearly three and, ideally, we wanted to move before he started school. It doesn't look like that's going to happen now.

"With rates going up, it's just not the right time – as much as we would have liked to. We will wait a few months.

"It's ruined our whole life plan which is really annoying. It’s changed our course completely and it has for a lot of people.

"I've had so many messages from people having to downsize or move completely. People's salaries are not going up at the same time, so it's terrible. The situation is really bad.”

Last month, the Bank of England raised the base rate – which is the interest rate that a central bank will charge commercial banks for loans –from 4.25 per cent to 4.5 per cent. It came after shock figures this week showed inflation was stuck at 8.7 per cent in May, when it had been expected to go down.

Homeowners are facing large increases in mortgage repayments, with the average two-year fixed rate deal hitting 6.19 per cent. The 0.5 per cent hike means those on a typical tracker mortgage will pay about £47 more a month while those on standard variable rate mortgages will face a £30 jump.

Rishi Sunak told the BBC that people should ‘hold our nerve, stick to the plan and we will get through this’.

He added that the Bank of England was ‘doing the right thing’ and has his ‘total support’, adding: “Inflation is the enemy."

Sophie said ‘it’s scary time for everyone’ but said her mum advised her and others in a similar position ‘not to panic’.

"Hopefully it will fix itself and come back down again,” she said. “But no one knows. You think you know and then everything changes again.

“If people are struggling to pay their mortgages, it's a slippery slope. I don't know how they expect people to buy.

"It has a knock on effect on renters, because rent increases as mortgages do. Everyone is really feeling it at the moment.

“It used to be that a mortgage payments were cheaper than renting but it doesn't seem to be that way at the moment.”

Mum shares money saving hacks

Sophie, known as the ‘budget mum’, on social media has amassed nearly 50,000 followers on her Instagram and TikTok accounts combined. She also has set up her own website.

“I help other mums to set up their own business and help them with all the marketing,” Sophie said.

“We were struggling financially so I set up my social media business and it changed my life because I can work around my son and it's flexible. I teach other mums to do the same and teach them how to be self-employed.

"I have messages from people saying their mortgage has gone up by up to £700 a month which is just crazy.

“I share all my money saving hacks. I go to a car boot every week and I share my finds there. People love it.

"There is no shame in buying things second hand and on a budget. It has really helped other families. With the cost of living crisis, people can't keep up with their old lifestyles.

“Being able to help is nice. It's rewarding. With prices going up, people's salaries from one job are just not cutting it anymore.

"It can be a side hustle for some people or a whole business. People just need extra money.”

‘Demand for houses is still going to outstrip supply’

Ben Small – who runs Auxilia Financial Services in Somerset, is one of the most highly rated advisers in the UK – having appeared in the Top Rated UK Advisers in the Times for the past three years consecutively.

He said it’s a ‘catch 22’ situation for prospective buyers, when asked if now is a good time to purchase a house.

"It's thought house prices will come down but nothing dramatic,” he said. “Anywhere between five and ten per cent.

"If you went back six months, if a house was advertised for £400,000, you would be fighting with people over how much more you need to offer to make sure you get that property.

“That's now kind of changed. People are going for the asking price or there's a little bit more negotiation than what there used to be.

"In terms of what prices houses are listed at, there's not much difference to where it was.

"Even though house prices may come down, demand for houses is still going to outstrip supply. Consequently, I can't see them dropping too much – not in the south anyway."

According to the National Residential Landlords Association, those who rent could face higher payments or the prospect of squeezed landlords selling their property.

“Today's mortgage increase is going to be tomorrow's rent increase,” Ben said. “Even if people are thinking of hanging fire, they are going to pay more on rent as time goes on.

"You are better off still getting yourselves on the ladder if you can do. At least the money you pay each month is going into paying off the captial. With a rental property, it's not.”

Ben said applications for new fixed rates can now be applied for, six months in advance.

“Traditionally you were only able to choose the next fixed rate three months before the current one comes to an end,” he said. “That has changed so I'm going through all my clients who are due to change their mortgage fixed rate in November and December.

"I’m booking in calls with them now to discuss an application for another fixed rate mortgage, with the same lender, depending on what the scenario is. It's a safety net. Yes, the price has gone up but you know where you are.

“If rates were to decrease over the next six months – fingers crossed they do – we can then cancel existing offer and put them onto a cheaper one, ready for when that time comes later in the year.

"I've spoken to a few big banks and they reckon it will keep increasing until the end of September / early October, if not a bit longer. If that does happen, anyone who plans solutions now is going to be in a better position than if they waited.”

Martin Lewis said this week that if interest rates were going to be high over three or four years, people will have to readjust their finances. In December 2022 the consumer champion warned the Government along with bosses from some of the UK’s biggest banks to prepare for a scenario in which interest rates soared.

The Money Saving Expert founder told ITV’s Good Morning Britain: “Waiting for it to happen would be too late. Yet now, the timebomb has exploded, and we’re scrambling about what to do." Click here to read more.