What now for your mortgage?
Amongst the current turmoil, we’ve seen a sizeable increase in mortgage interest rates.
In light of this, an analysis by the Resolution Foundation has suggested, for over five million households annual mortgage payments may rise by an average of £5,100 between now and the end of 2024. Although, £1,200 of this amount was attributed to the impact of the mini-budget much of which has now been shelved.
(Source: Resolution Foundation, 15 October 2022)
Inflation still remains high (at around 10%), and this will continue to have an impact on interest rates.
(Source: Office for National Statistics, CPI, October 2022)
UK house prices continue to rise, by 7.2%, on average, in the year to October 2022. But the general view is that price rises will ease further over time, with possible falls.
However, on a positive note, price rises over the last few years may offset any fall, as many existing homeowners have built up their property asset value. For example, in the last two years alone, the average house price has increased by almost £50,000.
So, is it now time to reassess your own mortgage borrowing needs? Of course, those on fixed rate deals would remain, if wanted, at their agreed interest rate until the end of their deal period.
Coming to the end of your mortgage deal rate period?
Across 2022 and 2023, around 1.3m and 1.8m borrowers, respectively,* will see their fixed rate mortgage deals come to an end. That accounts for almost half of all fixed rate borrowers! If they don’t act, they could end up on their lender’s Standard Variable Rate.
(Source: *UK Finance, September 2022)
What can you do to protect yourself?
In our autumn newsletter, we explain the implications for your mortgage – whether you’re looking for a new home or simply need to remortgage. At times like these your own values can really be utilised to your advantage. For example, some homeowners may view the combination of rising costs, and higher interest rates with great concern. In which case, when looking for a new mortgage deal, they may add selling up and downsizing into the mix.
Of course, the circumstances for each of you will be different, and that’s why it’s vital to take advice.