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.”
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.
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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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