12 Dec Alextra Mortgages – 2022 Roundup
After a steady start to the year, the second half of 2022 has seen a lot of turbulence in the mortgage world, with mortgage interest rates fluctuating, lenders constantly reviewing their mortgage range and the tightening of lending policy, which in turn has had a knock on effect with consumer confidence.
Recently we have seen mortgage rates increase to those levels last seen around 12 years ago when the average 5-year fixed was around 6% compared to the average 5-year fixed rate at the start of the year being around less than half of this. For some people, the rates that we have seen over the last 10 plus years are all that they have ever known, this is especially true for those that have acquired their first home during this period. This, along with the increasing cost of living, can be cause for concern for some – in particular for those that are due to come out of their fixed rate period.
The steep increase in mortgage interest rates can mean that people can expect their monthly mortgage payments increase by an average of £150-£200 per month. This is adding to the cost of living crisis and could mean that affordability for some households will be stretched to their limits.
Some good news
As we approach the end of the year, things are starting to look up. In recent weeks we have seen lenders reduce their fixed rates. Whilst it is unlikely that we will see rates as low as 1% and 2% again for a long time, this is still a step in the right direction and will undoubtedly instil some much needed confidence to borrowers.
In the meantime, whilst things continue to settle, there are also a number of things that borrowers can be doing to help improve their financial outlook such as:
- Review the household budget to see where you can reduce non-essential outgoings, this in turn will help to increase affordability prospects when your mortgage is next up for review
- Overpayments – even small regular overpayments can help you pay your mortgage off sooner. It could also mean that you qualify for better mortgage rates upon renewal. Be sure to check the limits on your overpayment facility first.
- Consolidate/pay off debts. Consolidating or paying off other outstanding debts (especially those that are costing you the most) can help increase your affordability prospects and therefore give you more options in terms of lenders and mortgage deals available to you when you are ready to renew
- Seek advice from one of our experienced mortgage brokers who will be able to provide you with more personalised guidance on how you can improve your financial situation
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE