The UK housing market is an important indicator of the country’s overall financial health. By taking a look at how many people are applying for mortgages, and how expensive these loans are, we can get a good idea of the state of the economy and what the immediate future might have in store for us all.
So what has been happening in the world of mortgages? We decided to find out.
Demand for mortgages drops sharply
Over the last few months, uncertainty surrounding the UK’s exit from the EU has started having a big impact in the housing market. A lot of homeowners and buyers are worried about what the future might hold. As a result, fewer are opting to move house with many putting their property purchases off until issues surrounding Brexit are resolved.
This has caused a sharp drop in the number of people applying for mortgages in the UK. According to figures published in the Guardian, mortgage lending has now dropped to its lowest level since the end of 2010, a time when the UK was in the midst of the financial crisis. Many experts predict that rates of borrowing will drop even further as Brexit creeps ever closer, especially if the current uncertainty continues.
Although no one knows exactly how the country will fare after March 29th, the Bank of England has said that a rate rise may be on the cards if the economy becomes unstable. This is most likely in the event of a no-deal Brexit, although a bad deal could have just as much of an impact on the economy.
If the base rate does go up, it will soon be passed onto customers and mortgages across the country will become more expensive. If you’re worried about a rate rise, talk to your mortgage provider about the fixed rate deals they have available and lock your rate in for the coming years.
Mortgage terms are getting longer
As house prices go up and buyers struggle to get on the property ladder, the number of people taking out long mortgages has increased dramatically. According to the Financial Conduct Authority, 40% of the borrowers who took out a loan in 2017 will be aged over 65 when their mortgage matures. And record numbers of people are also opting to take out marathon 40-year loans.
Paying loans back over such long periods of time can make it difficult for borrowers to save towards a pension. However, on the plus side, long mortgage terms make mortgage repayments a lot more affordable, helping more buyers get their feet on the property ladder.
If you’re thinking about buying or selling a property in the coming months, we can help. Drop into one of our local branches or visit our site today to find out more.