Author and founder of independent mortgage brokers London Money Martin Stewart blogs for us about mortgages and financial advice.
February
It’s not all doom and gloom for mortgage holders...
I thought I would wait until Blue Monday had passed and the grimness of January was behind us before reminding 1.8 million of you that your mortgage is likely to increase this year.
Yes that’s right, just as your December credit card statement thuds through the letterbox, perforating your ear drums and bank account, there is more bad news on the horizon.
Not so much “ New Year, New You,” more “ New Year, Woe is Me.”
It has been impossible to have missed the trauma that has beset the world of mortgages over the past two years. The headlines across all the newspapers have been screaming of “bloodbaths”, “housing crisis” and “mortgage arrears.” They do love a drama don’t they?
But sadly, the detail behind the hysteria is all too real. Many mortgage holders have been immune to the spike in the Bank Of England base rate which, in a little over 18 months, rose from 0.5% to 5.25%. But many haven’t. In isolation rising mortgage are bad enough, but when layered upon a never-ending cost of living crisis and continual tax increases, life has suddenly become very uncomfortable for a lot of us.
Unbelievably, we are approaching the anniversary of the first lockdowns following the pandemic of 2020. Back then we were fixing people for 5 years at rates below 1.5% . We had no idea what was going to happen back then and 2025 seemed such a long time away. Yet, here we are. Today, and depending on personal circumstances, you could very easily be looking at mortgage rates being three times higher than when you last fixed.
Every day we are having conversations with clients, counselling them through the new numbers and for many you can hear in their voice that we have just delivered the last news they wanted to hear.
Good news?
But do not despair, there may be some much-needed good news on the horizon (sorry tabloid editors). Take this with a pinch of salt because, as someone once said, it is tough to make predictions, especially about the future, but many analysts are predicting the Bank Of England may reduce the cost of the base rate by as much as six times this year.
That would herald some much-needed good news but, as with many things, news doesn’t always travel in a straight line. There are many moving parts to this and lender appetite, consumer confidence, inflation targets and market sentiment toward the Government’s spending plans and how they will pay for them, all get thrown into the mix.
As someone also famously once said, “It’s the economy stupid,” and we are very much reliant on all the component parts working efficiently and in harmony in order for us to feel the benefit of an expanding economy.
Personally, I don’t think this is happening. It feels like the economy is stuttering more than soaring so if you are a mortgage holder and your fixed rate is ending this year you might want to reach out to your mortgage broker six months before you think you need to. Forearmed is forewarned and while they can’t always save you money they might, at least, make sure you’re not lining the pockets of the bank instead of your own.
Martin Stewart is the Director of independent mortgage brokers, London Money
(Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it)
Contact:
Martin Stewart
Director
London Money
Email: enquire@london-money.co.uk
