High interest rates: CE of Co-Ownership reveals the importance of alternative, more affordable routes to homeownership

Mark Graham, chief executive of Co-Ownership, said: “The Bank of England’s decision to increase interest rates will cause huge concerns for homeowners on variable rates, and those coming to the end of a fixed rate term.

"As property prices have risen over the last few years, many buyers have needed to borrow larger sums for longer terms, and with the cost-of-living crisis already affecting homeowners, recent interest rate rises are eating into people’s disposable incomes in a very significant way.

“The increased base rate is likely already reflected in the costs of fixed rate mortgages as the markets were expecting this increase, but the rapid rise of rates in recent months has already caused severe affordability issues. Many people will who hoped to buy their first home will no longer be able to afford to do so. Alternative routes to home ownership, such as Co-Ownership, can offer hope to some of those prospective buyers, as they may still be able to own their own home with our help.

“Successful applicants to Co-Own, our most popular product, will purchase a 50% to 90% share of a property valued up to £190,000 – this is the share they pay a mortgage on. They pay us a rent on the rest and in combination this will always be less expensive than a full mortgage. When they wish, our customers can buy us out, or increase their share gradually so that they can eventually own the whole property.

“We shouldn’t expect interest rates to fall anytime soon, and they are never likely to return to the days of mortgages costing less than 2%. This is likely to be the new normal for a while. We know how important affordable housing is, and we understand the positive societal and economic impact homeownership can have.

"That’s why in the current expensive mortgage market, alternative and affordable routes into home ownership are so important – we will continue to play our part in ensuring our customers can access secure, comfortable, and affordable housing.”