Expert predicts 'rise in repossessions' as mortgage rates hit highest level in three years
In tough news for those looking to take their first step on the property ladder or approaching the end of their current mortgage deal the new average rate for a five year deal has hit six percent.
That's the highest level since 27 September, 2023, and it's bad news for those who are going to need a new deal in the near future.
According to Moneyfactscompare.co.uk the range of fixed rate deals in Britain below five percent dropped from 1,494 at the beginning of September to just nine on Monday (5 October).
Jack Malnick, Managing Director of Sell House Fast, warned that this would bring 'nothing but problems' for people and he declared 'there will undoubtedly be a rise in repossessions over the next 12-18 months'.
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The first group of people he said would be affected are the people trying to get on the property ladder, as he warned that buying a house at this point was 'particularly unattractive when often their rent might be lower than their mortgage now'.
"People will be forced to move"
The second group of people likely to be impacted would have it 'much worse', as Malnick said the people who fixed their deals between three and five years ago and are coming to the end of their fixed rate might be 'finding their mortgage has trebled or quadrupled'.
He warned that many people won't have money in the budget for a rise and said it'd be 'completely unaffordable' for them, so they are better off working out now whether or not they will still be able to afford their home when their rate expires.
"People will be forced to move to cheaper locations, downsize or simply won’t be able to afford to continue paying and end up in significant debt," Malnick said, as he urged people in this situation to act now and start planning instead of waiting for the wave to hit.
"Anyone with a mortgage rate expiring in the next year needs to plan ahead, work out what is affordable (or if it’s affordable) and make decisions based on that whether it is work/salary related, cutting outgoings or having to move rather than wait until it actually happens and having to find solutions when it’s too late.
"There will undoubtedly be a rise in repossessions over the next 12-18 months."
"Do not leave it until the last minute"
As for what people can do about it, his advice about planning ahead of time to work out what your mortgage is going to look like once your rate expires and you need to get a new one stands.
He suggested that people looking to buy a house and get a mortgage could consider trying to 'borrow more than you need' to keep more of your money in your bank account for this very rainy day.
He said: "An extra few thousand will have limited impact on the amount you pay each month but can provide additional cash that would otherwise be very hard to find.
"The other thing to do is to speak to a mortgage broker and lock in a mortgage rate at the earliest possible opportunity.
"Often a few months before the rate ends, you can always change it any time before the fixed term expires to a different product or lender if a cheaper rate comes out but at least it protects you from any increases between then and renewal
"Do not leave it until the last minute when you have no wiggle room and zero flexibility."
Joe Harker