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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

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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
A summer of ups & downs

Summer is here and activity in the housing and mortgage markets is
hotting up… and cooling down at the same time. Latest data from the
Royal Institution of Chartered Surveyors has positive news on housing
supply, with a run of thirteen successive negative monthly readings for
new instructions coming to an end with a positive reading in May. This is
the strongest reading for new listings since March 2021.

House price outlook

House price growth dipped in May and notably, the annual rate of growth fell to –
1.0%, marking the first time since 2012 that house prices have fallen year-on-
year. It remains to be seen which direction the market will take in the second
half of 2023.

Some are predicting that many homeowners will be forced to sell up when their
current fixed-term mortgage deals end, which would see a boost in supply that
might reinforce the downward price movement. Analysts are also suggesting
that first-time buyers (FTBs) could be delaying their homebuying plans in the
hope that mortgage rates or house prices are poised to fall sharply before too
long.

Bank Rate

Meanwhile, the Bank of England’s (BoE’s) Monetary Policy Committee (MPC)
increased Bank Rate from 4.5% to 5% in June. Borrowing costs are now at their
highest level since 2008. Those with tracker or variable rates have seen
immediate higher repayments and those on fixed rates are contemplating their
next move.

Mortgage Charter

Around 85% of lenders operating in the UK’s mortgage market have signed a
government charter agreeing to support borrowers following a meeting with the
Chancellor to discuss the impact of rising mortgage rates on homeowners.

The charter includes allowing borrowers to contact their lender for help without
impacting their credit file and enabling borrowers who are up to date with
payments to switch to a new mortgage when their fixed term ends without
another affordability check. The ability to switch takes effect from 10 July and
will be available six months before a borrower’s fixed term period expires.

Lenders will also help borrowers to plan for when their rate ends and offer
support to those struggling financially. This may include extending their
mortgage term to reduce payments, switching to interest-only, or temporarily
deferring payments.

Return of the 100% LTV mortgage

One especially noteworthy development is the launch of a new mortgage product
that allows FTBs to take out a loan on the full value of their home. The 100%
loan-to-value (LTV) mortgage is exclusively for current renters and depends on
their being able to prove a track record of timely rent payments. Otherwise, 100% LTV mortgages generally require a guarantor to cover any missed
repayments.

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

RICS, Halifax

Jake

August 17, 2023

Market update

100% mortgages, bank rate, house price outlook, market, mortgage, mortgage charter, mortgagemarket, rates

What happens if I can’t pay my mortgage?

Understanding your options

Here to help

Housing market– hope for the future

Bank rate hits 5.25%

House Prices Fall

What does the future hold?

Advice continues to be vital

A summer of ups & downs