The Treasury Minister says that support is available for those who are concerned about interest rates impacting their mortgages.
Dr Allinson said: ‘Whilst the Bank of England’s monetary policy decisions are wholly out of our control, the nature of our relationship with the United Kingdom means decisions on interest rates have a direct impact on households and businesses in the Isle of Man.
‘The overall makeup of our island housing stock is somewhat different to the UK, with a higher proportion of households owning their property outright. 25% of Isle of Man households are paying a mortgage on their property in 2021, compared with 30% in the UK, and 39% of island households owned their property outright compared to 33% in the UK.
‘These differences mean that the island’s experience of increasing interest rates will be somewhat different than the UK with a lower proportion of households paying a mortgage on their property.’
Whilst he said it is uncertain what the interest rates will be in 12 months time, he added: ‘We know that inflation is coming down particularly on our island, but interest rates are still high in the United Kingdom and across here and the monetary policy of keeping those interest rates high to fight inflation is still being adhered to by the Bank of England.’
Dr Allinson said that he met with representatives of the Banking Association, and asked them about concerns raised by third sector organisations.
He said: ‘They are obviously seeing people concerned, particularly when they come off fixed rates and have to renegotiate another rate and I would encourage anyone who has concerns about their mortgage to talk to their lenders, there are a variety of things that can be put in place in terms of extending the duration of the loan, or going into interest only products as well.
‘We haven’t seen any specific issues regarding mortgages or problems with taking back houses but we are continuing to monitor that situation.
‘If people are running into problems with their budgets, they are concerned about being able to pay not just their mortgages, but from a business point of view their interest on loans, or from a household point of view in terms of their rent, please reach out to the social security department for advice in what benefits you might be eligible to.’
The Treasury is monitoring the situation over the coming months, according to Dr Allinson.
He said that people are being more cautious in terms of taking out mortgages particularly as in the past 12 months there has been a rapid increase in house prices as well as a rapid increase in interest rates.
However, from his discussions with the Banking Association, he said whilst the market has ‘cooled down a little bit’, there is still a healthy market and still a lot of interest from people to own their own homes.
He added that he hopes in 12 months the current period will be seen as a time of rebalancing house prices, meaning that housing is far more affordable to those who need it.