And how long will it 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. But you might be wondering exactly what is a mortgage crunch and how long will it last. Adam Nanson, Managing Director at Your Mortgage Expert comments:
What is a Mortgage Crunch?
“The media love choosing buzz words to describe a current economic situation. We’ve seen credit crunches, now have sticky inflation and the latest is a Mortgage Crunch. It can be confusing for consumers when these buzz words become part of the media vernacular without any explanation of their meaning.
“We are currently in a situation where we have 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.
“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?
“Predictions at the start of 2023 were that inflation should fall over the year and with this mortgage rates should fall as well. So, initially the thoughts were that the mortgage crunch would be reasonably short lived.
“However, as high inflation has now become more prolonged, most predictions are now that mortgage rates will peak in 2024. Meaning the Mortgage Crunch will last longer than 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. 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.”
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.
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“This was knight in shining armour stuff. Our conscientious mortgage broker was a delight to deal with from the off and the key to our dream home.”
Max and Martha, First Time Buyer customers from Cardiff
“Being in the Armed Forces I am away a lot, meaning it can be hard to attend meetings, answer emails and especially hard to fill in forms. Adam and his team were extremely helpful and understanding of our situation and provided help wherever they could. After our initial meeting where we provided our required details, we actually did very little of the hard work, apart from signing a couple of papers.”
Callum and Verena, First Time Buyer Armed Forces Mortgage Customer from Salisbury
“I expect my circumstances were fairly rare, but the help and guidance I received from you was invaluable. I feel that the personal touch you provide offers something that appeals to the soldier in me. During my service I always liked to have a point of contact, someone who was the “go to” specialist in their field. This provides a degree of assurance about a situation and it was refreshing to find that same degree of certainty transitioning to civilian life, particularly with something as important as a mortgage and buying our family home.”
Andrew and Helen, Armed Forces Mortgage Customers from Salisbury
“Even though we were used to having a mortgage on the rental property, paying a mortgage on your own home was still a bit of a shock after years of having married quarter rental deducted from your pay at source. But, at every step along the way, we felt reassured, understood and that we really mattered to Adam. Trust is an important concept for military families and we trusted Adam.”
Fiona and Graham, Armed Forces Mortgage Customers from Wilton
“As a contractor, it was difficult for me to obtain a mortgage through normal channels so it was great to find a mortgage adviser that specialised in contractor remortgages and understood the challenges. In addition, I had fairly tight timescales, so wanted someone who could make the process quick and hassle free.”
Andrea, Contractor Mortgage Customer from Warminster
“I am a contractor, therefore require specialist mortgage advice. Adam has now concluded two mortgages for us (new mortgage then a contractor remortgage), and is currently arranging a buy-to-let mortgage for us. He also arranged our life insurance for us. We keep returning to him for some great reasons – he is always available, and ready to help. He provides great advice, and always ensures that he meets our requirements exactly. He is prepared to explain things in such a way that even a lummox like me can understand, and his level of service has remained consistently good over the last three years.”
Matt, Contractor Mortgage Customer from Southampton
“Adam’s advice on the different types of critical illness and life insurance were really useful. He also worked with us to decide the best combination of policies that would work with our existing policies to cover our needs. When doing this he happily tweaked quotes for us until we came out with an arrangement that was both affordable and would provide us with the level of cover we thought appropriate.”
Hannah and Steve, Protection Insurance Customers from Stamford
“Adam provided us with factual advice and also with options of which we were unaware. The advice on gifted equity was something we hadn’t heard about and this assisted us hugely to ensure repayments worked within our affordability. He provided us with a very personal service that made the journey from initial call, to mortgage offer and completion hassle free. We have already recommended Adam to someone and will continue to recommend his services in the future.”
Saul and Laura, Home Mover Mortgage Customers from Salisbury
“Mike and I collected the keys to our flat this weekend and we couldn’t be happier. It’s been a long time coming but we got there! We just wanted to say a MASSIVE thank you for everything you have done for us so far. We’ve really appreciated all the help, advice and reassurance you’ve given us all the way through this process. It’s really nice to have a friendly voice on the other end of the phone.”
Mike and Bethan, First Time Buyer Mortgage Customers from London
“Without question Adam found me a deal the estate agent’s broker couldn’t. He was very easy to contact whenever I needed him and he took time to explain the ins and outs of the Help to Buy equity loan scheme mortgage that he found me. I would rate him five out of five and will be back to use him when the time comes to remortgage or move.”
Chris, Help to Buy Mortgage Customer from Southampton
YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.
A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
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