Photo by UK Mortgage Market Sees Rise in Repossessions Amid Cost of Living Crisis
The UK mortgage market is facing challenging times, with a significant increase in repossessions and mortgage arrears. According to UK Finance, there was a 36% rise in repossessions in the first quarter of 2024, with 870 properties being repossessed between January and March. This surge is attributed to the cost of living crisis and rising household bills.
The cost of living crisis has put pressure on household budgets, making it difficult for mortgage borrowers to keep up with their payments. Additionally, the rise in mortgage rates, driven by base rate increases from the Bank of England, has also contributed to the growing number of repossessions.
Mortgage Experts Warn of Severe Consequences
Mortgage experts are warning of severe consequences for those struggling with their mortgage payments. With mortgage rates soaring, many borrowers are finding it difficult to keep up with their monthly payments. According to Mojo Mortgages, the average mortgage rate has risen from 1.78% in April 2022 to 5.33% in April 2024. This increase has resulted in a significant rise in monthly mortgage payments, putting many households at risk of falling behind on their payments.
Tips for Mortgage Borrowers Struggling with Payments
Mortgage experts at Mojo Mortgages have shared three tips for those struggling with their mortgage payments:
- Check your mortgage rate: If your mortgage payments have risen significantly recently, it’s essential to check whether you’ve been moved to your lender’s standard variable rate. This rate is usually higher than other mortgages on the market.
- Consider speaking to a whole-of-market broker: If you’re on the standard variable rate, consider speaking to a whole-of-market broker who can compare thousands of mortgage deals from different lenders and find the best option for your personal circumstances.
- Look into remortgaging options: If your current deal is ending within the next six months and you’re worried about high rates, look into remortgaging options now. Most mortgage offers are valid for six months, so if your current deal is set to end within that time, you may be able to secure a new one now and switch when your existing mortgage ends, avoiding any early repayment charges.
Inflation Hits 2% Target, but Mortgage Borrowers Remain Cautious
While inflation is forecast to have fallen to around the Bank of England’s 2% target, mortgage borrowers are still cautious. The cost of living crisis and rising household bills continue to put pressure on household budgets, making it difficult for borrowers to keep up with their mortgage payments.
The UK economy may be heading for a “soft landing,” according to the International Monetary Fund, but mortgage borrowers remain concerned about the impact of rising mortgage rates and the cost of living crisis on their ability to pay their mortgages.
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The UK mortgage market is facing challenging times, with rising repossessions and mortgage arrears. However, with expert advice and careful planning, mortgage borrowers can navigate these difficult times and find a way to keep up with their mortgage payments.
