I’m sure that many of you reading this article will recognise the famous movie entitled “The Perfect Storm”. The description of which is, “a tempest that may happen only once in a century – a nor’easter created by so rare a combination of factors that it could not possibly have been worse”.
The description above provides a good synopsis of where both current and prospective home owners find themselves in the current market. We have seen Brexit, the Covid Pandemic and now the War in Ukraine presenting the UK economy with its own “nor’easter”. The reality of this has seen the government and the Bank of England struggling to predict and control levels of inflation not seen in the UK in 40 years.
Traditionally, the Bank of England would raise interest rates with a view to slowing down consumer spending, however, in this instance, consumers are forced into spending due to the increasing cost of consumables (food, gas, electric, water, petrol/diesel etc). This creates a vicious circle where it becomes increasingly difficult to control inflation.
What is becoming more apparent is that lenders are taking a closer view on affordability and how inflation will impact homeowners’ ability to meet their household bills. Affordability concerns coupled with lenders continuing to be hit with the long-term effects of the Covid pandemic (large numbers working from home) mean that the mortgage market is becoming more complex.
What we are now seeing is lenders increasing interest rates both in line with the Bank of England rate, but also to prevent them from being overcome with an influx of new business. The latter could be put in place to deter demand and or allow them to catch up. We are seeing timeframes of between 10/15 days, with some lenders, just to assess documents……and that is working days!
So, to summarise, it has never been more important for you to seek the best possible advice in relation to your mortgage.
Both Suttons, and its team of advisers are “Top Rated” and will be happy to assist you.
Ben Horsfield CeMap
Head of Mortgage Services