How long will the mortgage crunch last?
There has been a great deal in the news at the moment about the current Mortgage Crunch and how it is impacting home owners and home buyers. But you might be wondering how long will the mortgage crunch last. Adam Nanson, Managing Director at Your Mortgage Expert comments:
What is a Mortgage Crunch
“The media love choosing buzz phrases to describe our economic situation. We’ve seen credit crunches and now we seem to have sticky inflation. It can be confusing for consumers when these phrases become part of the media landscape without any explanation of their meaning.
“The UK is currently has prolonged high inflation and the Bank of England has been raising interest rates in an attempt to curb inflation. The impact of this is that mortgage rates are more expensive than they have been for some time. According to MoneyFacts, the average two year fixed rate is 6.51%*.
“Financial experts and the media have therefore termed this period where mortgage rates have become higher than usual a Mortgage Crunch. Rather than a broader “credit crunch” where all types of loan become more expensive, the term Mortgage Crunch is just focused on the impact on mortgage rates.”
How long will the mortgage crunch last?
“Initially, it was thought that the mortgage crunch would be reasonably short lived. Predictions at the start of 2023 were that inflation should fall over the year and with this mortgage rates should fall as well.
“However, as high inflation has now become more prolonged – or sticky – most predictions are now that mortgage rates will peak in 2024. Meaning the Mortgage Crunch will last longer that was initially expected. In fact, latest predictions from The Resolution Foundation are that the average two-year fixed-rate mortgage will not fall below 4.5% until the end of 2027**.”
What does the Mortgage Crunch mean for remortgages?
“If you have a fixed term mortgage that is due to come to an end, we would advise you speak to your mortgage broker sooner rather than later in order to talk about securing a new rate.
“With rates predicted to rise over the next 12 months, it would be prudent to fix your rate as soon as possible as most industry experts are now predicting rates are going to increase.
“None of us have a crystal ball so we can’t completely predict what is going to happen with the mortgage market over the next two years. Or How long will the mortgage crunch last. Having said that, with the market being so volatile right now, by securing a fixed rate, it provides the security of knowing exactly how much you are going to pay each month.”
To speak to a member of the mortgage advice team about your mortgage ring us now on 01722 322683. Or complete a contact us form and let them know when we can call you back.
The information contained within this article was correct at the time of publication. It is intended for information only and should not be used as a basis for purchasing any products. We cannot be held responsible for something that was correct at the time but subsequently changes or goes out of date. For further information, contact Your Mortgage Expert on 01722 322683.
*Source: https://moneyfactscompare.co.uk/news/mortgages/best-uk-residential-mortgage-rates-this-week/
**Source: https://www.resolutionfoundation.org/publications/the-mortgage-crunch/