More borrowers are falling behind on their mortgage payments as interest rates and the cost of living remain high, according to trade association UK Finance. The third quarter of this year saw a 7% increase in mortgages in arrears compared with quarter two.
Economic struggles
Homeowners on a variable rate mortgage will be hoping that interest rates do not rise further. This was seen during the 2008 financial crisis when mortgage rates reached a 30-year peak of 6.63% and many had their homes repossessed.
Those in arrears now include buy-to-let mortgages, which is likely to mean landlords are forced to increase rents to make ends meet.
Unlike in 2008, banks are being put under more pressure to support those who are struggling. Citizens Advice Bureau advises homeowners to work out their budget before contacting their lender to arrange a payment plan.
Hope for buyers
However, there are some deals hitting the market for those looking to remortgage or move home, with Nationwide offering a two-year fixed 4.99% mortgage. So, although property sales have been falling recently, an upturn could soon be on the cards.
Potential buyers may be tempted to cut costs, but it is vital that they still carry out checks on any property, including carrying out a building survey. While not doing this may save money in the short term, it could lead to unexpected costs later on. There are various different types of building survey available that will flag any major issues likely to incur a hefty bill and help decide whether a property is worth the price.
While these are worrying times for many, the mortgage market remains stable and there is only a small percentage of people falling behind and risking repossession. This offers hope that the housing market will recover.
