With the rising cost of living and the impact this is having on mortgages, Barlow Irvin’s Practice Principal, Gary Oxborough, gives his expert advice.
The rising costs of just about everything that we spend our money on has been the major talking point recently.
Mortgage costs have also increased drastically over recent weeks, with lenders increasing their available rates almost daily. A year ago, if you were looking for a typical mortgage with a 25% deposit you would be seeing rates that were in the region of 1.5%-2%, these are now over 3%, which is a very significant increase in the cost of borrowing.
While the Bank of England have increased the Base Rate of Interest recently from the historic low of 0.1% at the start of 2022, to its current level of 1.25%, the interest in the fixed mortgage rates on offer isn’t actually directly linked to this. Mortgage application levels are still running at an extremely high rate, which means that lenders are struggling with their processes and are putting up their costs to try and slow the number of applications they are receiving. The problem with this is that it leads to lenders continually trying to avoid being the cheapest in the market, so rates continue to rise.
The big question is whether this is set to continue and where will mortgage rates go to before they start to level off, or even reduce again? Of course, we don’t have a crystal ball and the increases in the cost of living is going to have an impact on the overall economy more over the next few months. This should lead to a slowing of the mortgage market, which should mean that lenders start to try and become more competitive, which in turn, should mean that the current rate increases slow down or stop.
As always, your personal circumstances are the most important part of any conversation we have around mortgages, so please get in touch if you have any questions or concerns.
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments