Rising inflation and what does it mean for the mortgage market?

Households have come under increasing pressure from the cost of living crisis and has become a huge problem. UK inflation prices have risen above 10% for the first time in 40 years. Although, some people expect a long-term crisis, others are expecting a short term crisis. However, we are all likely to feel this to a degree because of the current war in the Ukraine. Some may only have to cut back on a few luxuries but others will face serious financial difficulty in particular when it comes to getting and maintaining a mortgage.

What does this mean for the mortgage market?

Increasing interest rates and the rising cost of living it will unavoidably effect mortgage budgets. A lot of buyers have borrowed a large amount to afford their homes due to the UK housing market in recent years. This may not have been an issue when the base rate was at an significant low, it may get difficult as borrowing becomes more pricey. Many people could get into financial trouble if the interest rate rises when household budgets are hit by inflation. Unfortunately, the situation may be worse for the first time buyer market as well as the effect on the self-employed and small businesses if they are already homeowners or wanting to buy for the first time. Falling income and rising costs could mean they find themselves in difficulty when securing a mortgage or remortgaging as a fixed-rate deal comes to an end.

How can Manchester money help?

Throughout the cost of living crisis, it’s normal to worry about your mortgage as it is one of the most substantial investments most people will make during their life. If you have a mortgage at the moment then you may be worried about how your repayments will be affected. This will depend on the sort of mortgage that you have. It is a good idea to consider changing to a fixed mortgage to protect yourself against steeply rising rates in the approaching months.  If your mortgage is due for a renewal in the next 6 months get in touch with one of our fantastic brokers early before any further interest rate rises. If you are a home owner or a first time buyer, prepare finances well in advance with one of our brokers. This will mean you are organised with your financial arrangements when you want to make an offer on a property.

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