Mortgages have become a hot topic of conversation far beyond the dinner table or golf course chit chat. Nowadays, people are discussing their mortgage woes at the school gates and in the supermarket aisles. It's not just homeowners feeling the pressure; even tenants are worried that their landlords, facing higher rates themselves, will increase their rent.
Let's explore five reasons why mortgages have become such a source of discussion and detail our top tips.
Rising cost of living worries lenders
Forecasts predicted a slowdown in price rises, signalling a decrease in the cost of living. However, recent data has spooked both markets and lenders. Inflation rates suggest that prices will remain higher for a longer period, leading lenders to believe that higher prices are becoming ingrained in the UK economy. As a result, lenders have increased their interest rates to compensate for the rise in inflation, impacting mortgage rates.
Skyline’s Top Tip
When faced with rising mortgage rates , consider exploring alternative lenders and mortgage products by talking to a mortgage broker. With access to the whole-of-market, mortgage brokers can access a wider range of products to find the most suitable rates. A knowledgeable mortgage broker who can guide you through the process and provide tailored advice based on your specific needs and financial circumstances.
The aftermath of the 2021 stamp duty frenzy
Did you buy a property during the 2021 stamp duty freeze? The stamp duty concessions implemented during the pandemic created a rush among property buyers. These tax breaks made an already hot housing market even hotter, encouraging people to move more quickly. Many buyers secured two-year fixed mortgages, which are now set to expire. Unfortunately, current mortgage deals come with considerably higher rates, potentially leading to hundreds of pounds in additional monthly repayments.
Skyline’s Top Tip:
Effectively, mortgage rate increases will negate the savings many made during the stamp duty freeze. If you see yourself living in your home for the foreseeable future, locking down certainty and planning for mortgage payments over the longer term may be worth exploring with your mortgage broker.
Last-minute changes and withdrawals
Choosing the right mortgage product requires careful consideration and advice. However, some lenders are currently withdrawing mortgage deals with minimal notice, creating a frenzied atmosphere. Some lenders aim to avoid offering significantly cheaper deals than their competitors and only want to handle a manageable number of applications. These sudden changes add stress to an already complex situation for borrowers.
Skyline’s Top Tip:
By engaging in conversations with your mortgage broker as early as 12 months but ideally 6 months before your mortgage term expires, will give them ample time to explore various mortgage options on your behalf. This proactive approach allows you to plan and prepare for your remortgage well in advance, ensuring a seamless and stress-free experience. Giving yourself sufficient time to navigate the process will increase your chances of securing the best possible outcome.
The cost of doing nothing
Some homeowners opt to wait for things to settle down, unaware of the potential shock they may face. When a fixed-term mortgage ends, borrowers automatically revert to their lender's standard variable rate (SVR). These rates are typically higher, prompting most people to seek another fixed deal. However, those who choose to wait and see may experience a significant jump in their mortgage rate, resulting in a considerably higher monthly bill.
Skyline’s Top Tip:
It's important to consider and discuss alternative products with your mortgage broker as early as possible, rather than assuming waiting is the best option.
Low rate addiction
The rise in mortgage rates since December 2021 has surprised many individuals accustomed to ultra-low interest rates over the past decade. This prolonged period of historically low rates has made current increases seem even more dramatic. For first-time homebuyers, this situation may come as a shock, as they have never faced higher rates. House prices have soared, leading to larger borrowing amounts, were higher rates are now a reality. The impact extends to tenants as well, as landlords facing higher costs may raise rental prices and reduce the availability of rental properties.
Skyline’s Top Tip:
The rise in mortgage rates since December 2021 has surprised many individuals accustomed to ultra-low interest rates over the past decade. This prolonged period of historically low rates has made current increases seem even more dramatic. For first-time homebuyers, this situation may come as a shock, as they have never faced higher rates. House prices have soared, leading to larger borrowing amounts, where higher rates are now a reality. The impact extends to tenants as well, as landlords facing higher costs may raise rental prices and reduce the availability of rental properties.
Talk to Tony
Talking to an independent mortgage broker will give you an idea of what the current most suitable mortgage rates are for your individual circumstances. By booking a free online mortgage appointment at a time that suits you, you can discuss your individual mortgage requirements and gain the knowledge you need, in order to make the right mortgage decision for you.
Your home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. A fee may be charged for mortgage advice. The amount will depend on your circumstances.
Skyline Mortgage Consultants Limited is an Appointed Representative of The Right Mortgage Ltd, which is authorised and regulated by the Financial Conduct Authority. Skyline Mortgage Consultants LTD registered in England and Wales Number 8157062. Company Registered Office: Heathmans House, 19 Heathmans Road, London SW6 4TJ