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Mortgage’s- It’s not all doom and gloom

As mortgage rates reach their highest level in 15 years, many
homeowners are fearing the worst.

But there are indications that things aren’t as dire as they appear.

Firstly, very people are actually losing their homes – just 610 were repossessed
in Q2 2023 (1) .

Initiatives like the Mortgage Charter are also encouraging lenders to reach
payment agreements with their customers.

The UK is also enjoying good job security, in stark contrast to the waves of
layoffs seen during previous economic crises, making it less likely that people
will lose their jobs.

Furthermore, house prices shot up during the pandemic, so many homeowners
have more equity in their home. This may help them get better rates when they
remortgage.

Your home may be repossessed if you do not keep up repayments on
your mortgage.

1 UK Finance, 2023

Jake

October 10, 2023

Market update

doom and gloom, highest rates in 15 years, homeowners, Mortgages
Protection Insurance- It’s good to talk

Over a third of tenants (34%) would be immediately unable to pay their
rent from their savings if they lost their job, says Shelter (1) .

Yet just 11% of renters have insurance to protect them financially if they
couldn’t work (2) .

Unlike homeowners, who are usually advised on the benefits of protection
insurance when taking out a mortgage, renters have less exposure to financial
advice.

Bridging the gap

Having discussions about protection insurance with friends and family who are
renting could help to bridge this gap and ensure that more renters understand
the benefits.

If you have any friends or family members who rent and are interested in
income protection, please don’t hesitate to refer them to us for professional
advice.

As with all insurance policies, conditions and exclusions will apply.

(1) Shelter, 2023
(2) LV=, 2022

Jake

October 10, 2023

Market update

Income Protection, Landlord, Paying rent, Tenants
Why you shouldn’t cancel your protection

Research shows that a rising number of people are cancelling their protection insurance policies as the cost-of-living crisis continues to bite.

According to research by Consumer Intelligence (1) , 8.2% of people have cancelled
or reduced an insurance policy and 6.8% said they would consider cutting back
in the future.

Not the answer

It is understandable that households struggling with basic expenses would look
to cut costs wherever possible. However, cutting back on protection insurance
could make an already difficult situation much worse.

It won’t happen to me

There is a tendency to think that bad things only happen to other people, but the
fact is that you never know what is around the corner. Protecting yourself
financially is one of the best ways to minimise your vulnerability to financial
shocks.

Sadly, being too sick to work is not as rare as you might think. According to the
Office for National Statistics (ONS) (2) , the number of working-age people who
can’t work due to long-term sickness is now 2.5 million.

You’re not alone

If you’re looking to cut costs and don’t know where to start, we’re here to help
by identifying areas where you may be able to economise – without sacrificing
your vital protection cover.

As with all insurance policies, conditions and exclusions will apply

(1) Consumer Intelligence, 2023
(2) ONS, 2023

Jake

October 6, 2023

Market update

Cancelling Protection, critical illness, Expenses, Income Protection, life insurance, ONS, Protection
What to consider before remortgaging

With mortgage rates at their highest since the 2008 financial crisis (1) ,
those looking to remortgage have more to think about than usual.

Many whose deals are coming up for renewal will have agreed their mortgage at
a time when Bank Rate was just 0.1%. Now, it stands at 5.25%.

If your deal is coming to its end, what do you need to think about before signing
on the dotted line?

Start early

When your current mortgage deal expires, you’ll automatically be moved to your
lender’s Standard Variable Rate (SVR) – their rate outside of any mortgage
deals. Usually, this rate is higher than other types of mortgages, so you should
always look to secure a new deal ahead of your current one expiring.

Consider a tracker or variable rate mortgage

Whilst fixed-rate deals are a popular choice for mortgage holders, they may not
always be the most suitable choice while mortgage rates are high or the
economy uncertain. A variable rate or tracker mortgage moves up and down
with Bank Rate – so while your payments could go up, they could also come
down in the future.

Take advice

Our experts are here to advise you and help you select the most suitable
mortgage product for you, so please talk to us if you have any concerns.

Your home may be repossessed if you do not keep up repayments on
your mortgage.

1 Money Facts, 2023

(1) https://moneyfactscompare.co.uk/news/mortgages/average-two-year-fixed-
mortgage-surpasses-mini-budget-peak/

Jake

October 6, 2023

Market update

mortgage advice, remortgaging, start early, tracker mortgage, variable rate mortgage
What happens if I can’t pay my mortgage?

Throughout 2023, it’s estimated that 1.8 million fixed-rate mortgage deals will
expire (1) . With mortgage rates at their highest in 15 years (2) , many of those who
remortgage will see their repayments increase sharply.

Understanding your options

You could get in touch with your lender, as they may have options available for
homeowners who are struggling.

For example, you might be able to:

 Switch to an interest-only mortgage – instead of a repayment mortgage,
where you repay the capital plus interest
 Extend your mortgage term – this will lower your monthly repayments –
however, it means you’ll pay more interest overall.

You might also be able to take a payment holiday or reduce the amount you are
paying for an agreed period. Before making any decisions, it’s a good idea to
speak to us first.

You could also consider reducing subscriptions to services like Netflix, shopping
around for better deals on broadband and insurance, and drawing up a budget to
see where else you might be able to cut costs.

Here to help

We understand that many homeowners are very worried about rising mortgage
rates. We are here to advise you about your options and help you make
informed decisions about the future – so please get in touch.

Your home may be repossessed if you do not keep up repayments on
your mortgage.

1 UK Finance, 2023
2 Money Facts, 2023

Jake

October 6, 2023

Market update

2023, bank rate, extend your mortgage term, Money Facts, switch to interest only, UK Finance, What happens if I cant pay my mortgage
Housing market– hope for the future

A lot has been going on in the property market lately. Mortgage rates
are rising, house prices are falling, and many homeowners are feeling
uncertain about the future.

There are some sparks of good news to be seen amidst the doom and gloom,
however. Inflation is finally falling—down from 6.8% in the year to July
compared with June’s figure of 7.9% (1) – while the bank rate is also thought to be
nearing its peak.

Bank rate hits 5.25%

The latest meeting of its Monetary Policy Committee on 3 August 2023 saw the
Bank of England (BoE) increase the bank rate for the 14th consecutive time to
5.25% (2) . Higher interest rates make it more expensive to borrow and spend, thus
reducing demand and slowing price growth.

Positively, however, there now appears to be consensus amongst economists and
financial experts that Bank Rate is finally approaching its peak.

House Prices Fall

As they are led by Bank Rate, mortgage rates have also been rapidly increasing.
The average rate for a two-year fixed mortgage at time of writing stands at
6.73%, according to MoneyFacts (3)– up from 2.34% in December 2021 (4).

According to the latest UK Residential Survey from the Royal Institute of
Chartered Surveyors (RICS), higher mortgage rates have led to a sharp
downturn in demand from prospective homebuyers. Nationally, a net balance of –
45% respondents noted a decline in new buyer enquiries, whilst -44% reported
a decline in sales agreed (5).

Nationwide’s House Price Index (6) found that house prices fell by 0.2% month-on-
month and 3.8% year-on-year in July, while Savills expects a continued
downward trajectory as high mortgage rates continue to suppress the market.

What does the future hold?

In the short term, homeowners and prospective buyers can expect more of the
same; high interest rates – and therefore mortgage rates – are expected to
persist until at least 2025 to ensure that inflation falls back to the BoE’s 2%
target.

Looking further ahead, things look brighter. Although Savills predicts that house
prices will fall by 10% this year, it forecasts a return to marginal growth in 2024
(1%) and 2025 (3.5%), and then much stronger growth in 2026 (7%) and 2027
(5.5%) (7).

Advice continues to be vital

In difficult economic times, professional advice continues to be vital to ensure
that you are making informed decisions about the most suitable products and
solutions for your circumstances. Although the future currently seems uncertain,
we’re here to advise and guide you on your mortgage options – whether you’re a
first-time buyer, coming to the end of your mortgage deal, or looking to move.
If you are feeling concerned or unsure about your mortgage, please don’t
hesitate to get in touch.

Your home may be repossessed if you do not keep up repayments on
your mortgage.

1 ONS, 2023
2 Bank of England, 2023
3 Moneyfacts, 2023
4 Moneyfacts, 2022
5 RICS, 2023
6 Nationwide, 2023
7 Savills, 2023

Jake

October 2, 2023

Market update

advice continues to be vital, Bank of england 2023, bank rate, house prices fall, Housing Market, money facts 2022, Moneyfacts 2023, Nationwide, ONS, RICS, Savills, what does the future hold
House prices slip as rate worries weigh

Uncertainty and rising rates are combining to put pressure on buyers
who are growing increasingly cautious, which in turn is pressurising
prices.

House price growth dipped in May and the annual rate of growth fell to -1.0%.
The Bank of England’s Monetary Policy Committee increased Bank Rate to 5% in
June. Borrowing costs are now at their highest since 2008. Those with tracker or
variable rates have seen higher repayments and those on fixed rates are
contemplating their next move. Some are predicting that many homeowners
may be forced to sell when their current fixed-term ends, the market could see a
boost to supply, reinforcing a downward price movement.

Whatever happens in the months ahead, we’re here to help.

Your home may be repossessed if you do not keep up repayments on
your mortgage

Halifax, 2023

Jake

August 17, 2023

Market update

House prices, property value
Average monthly mortgage repayments rise

Latest analysis has revealed how quickly the mortgage market is
changing.

Homeowners coming to the end of a five-year fixed term, on an average rate of
1.99%, would have been paying £725 a month. The average rate for a five-year
fixed-term mortgage was 5.83% at the end of June 2023. On a remaining
mortgage balance of £143,465, those remortgaging onto another five-year fixed
rate would see their average monthly repayment increase to £1,014 – a hike of
£289 a month.

Homebuyers currently looking to secure a deal on the average house price
(£286,489) will face a monthly mortgage repayment of £1,362 – based on a 25-
year term at 75% loan-to-value at an average rate of 5.83%.

Your home may be repossessed if you do not keep up repayments on
your mortgage

Octane Capital

Jake

August 17, 2023

Market update

latest analysis, mortgage repayment, Octane Capital, rise
Home insurance costs below inflation

The average cost of buildings and contents insurance rose by less than
inflation in the past year, the ABI’s Home Insurance Premium Tracker
shows.

In total, the average price paid for home insurance in Q1 2023 was up 6% on
the same quarter last year. This is significantly below inflation in the past year.

Average premiums for a combined buildings and contents policy were up 3% on
the previous quarter and 6% over the year. Likewise, the average buildings only
policy was up 1% on the previous quarter and 5% in the year. Finally, for
contents only cover, the average price paid fell by almost 1% on the previous
quarter and rose by 1% in a year.

Meanwhile, home insurers paid out £2.5bn in claims, up 6% on 2021.

As with all insurance policies, conditions and exclusions will apply

Jake

August 17, 2023

Market update

2023, ABI’s, contents, Home insurance, inflation, Q1, Q1 2023
How to cover your funeral costs

Fewer than one in five over 50s have arranged for their funeral costs to
be covered by a life insurance policy, a new study has revealed.

As well as 17% who have cover in place for funeral costs, a further one in 10
expect their loved ones to use proceeds from selling their house or assets. In
total, 42% have a savings pot in place to cover these costs. Despite this, 38%
said they can’t afford to put money into savings.

One in five of those without any financial provision for their funeral costs said
they don’t want to think about it, while 17% of those unsure how the costs will
be covered have no savings in place to pay for this.

Taking the burden away from your loved ones can be a huge relief for those you
leave behind.
As with all insurance policies, conditions and exclusions will apply

OneFamily

Jake

August 17, 2023

Market update

costs, Funeral, life insurance, loved ones, one family, study