In the midst of the current cost of living crisis, many individuals are finding themselves in a challenging financial situation. Stubbornly high inflation rates and interest rates at the highest level in 15 years have driven up the cost of mortgages, rent, energy, food, and fuel.
Recent YouGov research indicates that around 7.91 million people in the UK are now considered to have adverse credit, a significant increase of over 1.6 million from the previous year. And according to Bank of England data, UK mortgage arrears hit a six-year high, reflecting the impact of high borrowing costs on household finances.
The Bank of England Holds Steady
This past week reaffirmed the BoE’s stance, voting by a majority of six to three, the Bank’s monetary policy committee (MPC) left interest rates unchanged at 5.25% for a third consecutive time.
Governor Bailey emphasised the need for ongoing vigilance in managing inflation, suggesting a continued period of tightening monetary policy. And in the published minutes of the meeting, the panel said the choice had been a difficult one, between leaving rates on hold and restarting its most aggressive cycle of rate increases in decades.
Global Tensions and Interest Rates
Compounding national challenges are recent global developments, particularly in the Red Sea. The escalating tensions involving attacks on ships by Yemen’s Houthi rebels have led shipping giants like AP Moller-Maersk to halt shipments through this crucial trade route. These events have a direct bearing on global oil markets. If oil prices were to increase, this would likely delay or damage any progress the UK is making on inflation, potentially forcing The Bank of England to increase the base rate of interest once again.
Adverse Credit and Mortgages
If you’re among those with a poor credit rating, the prospect of obtaining a mortgage can seem daunting. Common issues like missing credit card payments, defaulting on loans, or applying for credit too frequently can make most lenders view you as a higher risk. With fewer lenders willing to consider your application, it can be challenging to know where to turn. However, it’s important to remember that all is not lost.
Hope for Buyers with Adverse Credit
Our award-winning mortgage brokers offer a significant advantage in this landscape. We provide access to a diverse range of over 30,000 mortgage products from approximately 70 lenders – a much broader spectrum than what you might find at a traditional bank or building society.
So whether you’re contemplating purchasing a new home, diving into the buy-to-let arena, considering switching products, or exploring remortgaging options, we’ve got your back. Reach out to us today at 0208 364 3444 or click here to schedule a free consultation call
Christmas Opening Times: Our offices will be closed on 22 December 2023 and reopen on 3 January 2024.
Rents Soar As Landlords Pass On Rate Rises
Tenants have paid more than £85 billion in rent over the past year, according to a report from estate agent Hamptons. It is more than double the amount spent on rent in 2010 when the figure reached £40 billion.
The increase has been driven by a 25% increase in the number of households who are renting as well as the rise in rents, which in turn has been caused by higher landlord mortgage costs. The average rent on a newly let property increased to £1,348 per month in November. This is £125 more than in the same month last year (a 10.2% uplift).
Rents have risen fastest in London, where the average monthly rent is now at £3,174, over 13% more than a year ago.
Rightmove Expects Price Falls In 2024
Online property portal Rightmove says it expects average asking prices for properties coming to market to be 1% lower by the end of 2024 as the market continues to move back to ‘more normal’ levels of activity after the pandemic period.
A year ago, Rightmove predicted average new seller asking prices would drop by 2% in 2023, and they are now 1.3% lower year-on-year.
Rightmove says mortgage rates will settle in the New Year but will remain elevated, and this is likely to have a dampening effect on buyers’ budgets.