With the cost of living spiralling upwards many Homeowners are deciding to downsize and are considering the costs involved to move house. They have already been hit hard and have paid more for council tax, energy and food. It’s a tall order to find more money to pay mortgage costs.
It’s a shock and they understandably are looking at several options :-
- Can they afford the mortgage increase?
- Should they move to a fixed rate?
- Maybe they should move house and trade down?
The big question, was the new Bank of England interest rate required. Many have commented that it would have been better for all concerned if the interest rate had remained the same until after the summer. That way the inflation rate could have been again calculated.
Putting interest rates up each month doesn’t help anyone. Now we have a situation where Mortgage Brokers are fighting to save deals, lenders have withdrawn rates and the Homeowner, First Time Buyer is in uncharted waters.
What do they do next? How do they manage?
Some Homeowners are downsizing – Aged 55 plus so that they can release capital and probably looking at ways of retiring early.
First Time Buyers who are buying new build will simply wait until the Developer decreases the price.
Investors that own property will need to increase their rents to cover their increase in mortgage costs.
Home Buyers will take a chance and offer a lower price.
We will see movement in the housing market but it will take time. The government will collect lower Stamp Duty Land Tax and this will hit them hard. No Pain no gain seems to be the moto. In Sept last year we had a change of leadership, without consultation the party made decisions and the Bank of England didn’t like it. Now it’s the other way.
Being forced to sell or just not being able to afford the basics will take its toll. In real terms the new Bank Of england rate will pause the economy growth.
The Homebuyer Conveyancing comparison website has seen enquiries drop when interest rates are announced and then they have seen a high percentage of Homeowners visiting the website to check out their sale conveyancing costs. Many people have taken away a combined sale and purchase conveyancing quote where the purchase property price is significantly lower than their own home.
The buy to let market has shifted to buying in a company name / remortgaging in a company name.
What happens Next?
Existing Homeowners when they come to the end of their fixed mortgage rate will need to prioritise their outgoing costs. Presumably the Uk Government is thinking of ways to overcome the recent turmoil. The easy option will be to hope that inflation reduces and that teh bank of England can conclude that we have reached peak and that inflation is dropping.
