Brokers say borrowers come 'screaming for help'
Over half of homeowners and buyers are concerned that the cost of their mortgage will rise should the Bank of England (BoE) increase the base rate for a 13th consecutive time tomorrow, results of two separate surveys have revealed.
In a survey of 1,180 homeowners with a mortgage, commissioned by specialist property lender Octane Capital, 56% stated they were either very or somewhat concerned about the potential of a future increase in the cost of their mortgage, ahead of the base rate decision by the central bank.
For 21% of those surveyed, the situation has caused increased financial stress and anxiety, with 6% forced to reconsider or delay plans to improve their home.
Meanwhile, in another survey – this time with 1,071 current UK homebuyers as respondents, nearly two thirds, or 64%, stated that they were worried that a BoE base rate hike could cause mortgage rates to follow suit, further increasing the cost of climbing the property ladder.
The research, commissioned by estate agent Nested, also found that 54% were already struggling with the high cost of homeownership in the current market, with 28% saying that they would have to abandon their plans to purchase completely should the cost of borrowing increase any further.
“All eyes will be on the Bank of England again this week, and homeowners and buyers across the nation will be hoping it’s not a case of unlucky number 13 when it comes to a potential increase to interest rates,” commented Jonathan Samuels, chief executive at Octane Capital.
“For those who face the potential of higher monthly mortgage repayments, it’s understandably a worry and many existing homeowners have already seen their household finances stretched over the last 18 months due to increasing mortgage rates.”
Alice Bullard, managing director at Nested, believed there was a strong likelihood that we could see another BoE base rate hike tomorrow.
“For the nation’s homebuyers, it will seem like the increasing cost of borrowing is never ending, pushing their plans to purchase that little bit further out of reach,” she said. “For those currently looking to buy, the important thing is not to panic.
“While rates are climbing, the mortgage market turbulence seen following last September’s mini budget has subsided, and there remains a wide range of product options available. So, stay calm, talk with your lender, and once you’ve assessed your position in the market, you can assess the property stock available to you.”
Panicking borrowers reach out to brokers for help
Justin Moy, managing director at EHF Mortgages, shared that there were plenty of panicking borrowers “screaming for help” already in his inbox on Wednesday morning, right after the latest consumer price index figures were published, showing that annual inflation remained at a high-level 8.7% in May.
“I think many borrowers are very tuned into the economy and the importance of figures such as inflation, and now recognise far better the need to act swiftly,” Moy said. “With so many deals expiring in the next six to nine months, the impact of the base rate increases, and those yet to come, are now truly hitting home.”
Lewis Shaw, founder of Shaw Financial Services, said people were right to be worried.
“We’ve had a decade of benign interest rates and rising house prices,” he pointed out. “Millions of homeowners thought rates could never rise as far and as fast as they have. Everyone wants everything done yesterday, but that’s just not possible.
“Moreover, there is a backlog of deals to sort, and the diary is already blocked out for the rest of the week. The top and bottom of it are don’t sit and wait. Take action quickly.”
Joe Stallard, director and advisor at House and Holiday Home Mortgages, related that they also had a number of clients in touch since early Wednesday morning.
“We go over their situations carefully with them, and a lot of work at the moment is in reassurance, as well as searching for solutions in the eye of the storm,” he said. “It’s definitely time now for some stability back in the mortgage market to stop the panic.”
Luke Thompson, director at PAB Wealth Management, added that he already had four or five people contact him in the morning with regards to their mortgage.
“It can’t be hidden that the latest inflation figures are horrendous, and with that in mind, I think we could see the highest range for interest rates moving upwards again,” Thompson commented. “Those predictions from the start of this year are already starting to look to be miles out, and I think homeowners are going to have to get used to a lot more pain before interest rates start to settle down.”
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