Rising interest rates are making life tough for both first time buyers and those looking to move up the housing ladder.
Rocketing energy bills and inflation are creating havoc among family budgets.
Nevertheless, all is not lost … even for those with apparently bleak scenarios.
Steve Griffiths, product and sales director at The Mortgage Lender, told Financial Reporter: “With a lot of uncertainty in both the political and economic spheres, many people will be confused and concerned about their housing situation, and what the future holds. With rates changing often, and lenders having to be agile, brokers can lend a supportive ear and provide guidance for borrowers on their next steps. There are still lending options available.”
However, monetary discipline and the ability to maintain a healthy financial history remain vitally important.
He said: “With costs rising but wage inflation stagnant, reliance on short-term credit like personal loans, credit cards, overdrafts, and buy-now-pay-later schemes is growing.
“Taking on unsecured debt could be a red flag for some lenders and mean individuals are unable to get a preferable rate and therefore find it challenging to afford their new re-payments.”
Missing regular payments can be an issue too.
He went on: “Over a tenth of people have missed some form of payment since the start of 2022, which rises to close to a third of 18-34 year olds. This winter will be a test for many. Defaulting on bills can lead to a worsened financial history and therefore impact affordability when it comes to either getting a mortgage or re-mortgaging.”
For those with a mortgage already, but looking for new horizons, porting – taking your existing mortgage with you, so avoiding a potentially more costly package – may be the answer.
Certainly, the anecdotal evidence across the industry suggests it is becoming more popular.
Speaking to trade website Mortgage Solutions, Aaron Forster, director at Create Finance, stated: “It makes more sense for a lot of clients to port their current rate as this is likely to be significantly lower than what they would get if they moved their mortgage elsewhere. Why would someone want to move their mortgage where they may have a rate as low as one per cent, onto a deal paying over five per cent?
“Previously, clients would quite happily move their mortgage as this may have meant they could borrow more money or even get a better rate. This, for most people, simply isn’t the case anymore.”
However, for those thinking of travelling this route, the choice may not always be theirs. On the back of today’s barrage of stress tests, a real obstacle, It can be taken out of their hands.
MoneySavingExpert cautioned: “When you ask your lender to ‘port’ your mortgage, you in effect have to reapply for that deal. Unfortunately, there’s no guarantee that you’ll qualify even though you did the first time you took out the mortgage. You may struggle if circumstances have changed, for example, you’re now self-employed, you earn less or you have more debt and/or outgoings.
“Or you might not have changed at all but your lender’s criteria has, so even though you got your first mortgage without hassle, it doesn’t mean the same will happen again.”
Don’t rush into it is their message. “Before you commit to selling your property and buying a new one, you should do your checks to see if you are likely to qualify.”
According to the Financial Conduct Authority, there are up to 200,000 so-called “mortgage prisoners” who can’t port or get a new deal.
Which is where an experienced mortgage broker can make all the difference.