It will come as no surprise to FTAdviser readers that many would-be borrowers feel the mortgage market is a mess.
The continuously changing mortgage rate environment alone is hard to navigate, especially for many first-time buyers.
And conflicting messages on social media can be very off-putting to the general public. With the interest rates so high and house prices still soaring, buying a house and getting a mortgage can be incredibly difficult without advice.
A survey from Butterfields Mortgages in August has stated that 20 per cent of borrowers have delayed or abandoned their plans to buy a new home in the past year due to higher rates.
That’s one in five borrowers that won’t be buying a new home due to the interest rates. This indicates how rises in interest rates alone have cut off a large proportion of people from becoming homeowners.
The average rate of house price growth in the UK has only recently begun to cool - but not enough - and servicing the mortgage on the property of their dreams can feel more like a nightmare.
Not only can people not afford to buy new houses, but the Butterfields Mortgages survey also showed that 13 per cent of borrowers have had to downsize or move to a cheaper property to lower their mortgage repayments.
That’s 13 per cent of borrowers that could have lowered their standard of living because of the high-interest rate environment and persistently high inflation.
Commentators have pointed out that these people would not have been making a poor financial decision when they bought their home, let’s say five years ago. No one would have guessed that the interest rates would skyrocket as they have.
Effect on house prices
One of the biggest issues is confusion about the economy and its effect on lenders and house prices. It has become hard to predict what will happen next.
According to Butterfield, 44 per cent of existing mortgage customers are confident that interest rates are nearing their peak and borrowing costs could ease in the coming 12 months.
But that means 56 per cent of people believe rates could still increase by some margin. This highlights how unpredictable the mortgage market is and how much of a mess it is to navigate without advice.
Why would someone enter the market without taking expert advice if they’re not sure if they could afford their mortgage in just – let’s say - six months?
Confidence is such a crucial part of our economy and when people who want to buy houses lack confidence - and have not taken advice - it is no wonder that some people end up making the wrong turn.
It's not just the interest rates that are the problem for first-time buyers, the ridiculously high house prices are crippling as well, especially in London.
