You can’t have failed to notice the fallout of the recent Mini Budget, a £45 billion tax cutting package, paid for by increased public borrowing.
Since the Chancellor Kwasi Kwarteng delivered his statement, we’ve seen the pound crashing to its lowest level against the dollar in 37 years, the Bank of England buying £65 billion of government debt to stop some pension funds collapsing and the International Monetary Fund openly criticising the government and urging it to reevaluate its policies.
We’ve also seen many lenders stop offering mortgages. In fact, a record 935 home loans were withdrawn on Tuesday 27th September, according to Moneyfacts – more than double the previous record set on April 1st 2020.
And as the UK continues to grapple with a cost of living crisis, there are widespread fears that interest rates and mortgage rates will soar, putting even more pressure on household’s finances.
So, let’s step back, take a deep breath and ask what does this mean for you and your finances?
Firstly, we would urge you not to panic.
Of course, that is easier said than done, but even though there is considerable uncertainty right now, widespread panic among mortgage holders could cause brand new problems.
Due to the current volatility in the markets, we can’t be sure how much interest rates will rise in the coming months, and that’s the reason why so many mortgage products are being withdrawn.
Lenders aren’t pulling out of the market, they’re just reassessing the situation in light of recent events and not committing just yet – and that’s a crucial point to remember.
You may also be asking yourself if you should change your mortgage deal, even if you’re currently on a fixed rate mortgage, or be wondering what to do if your deal is up in the next few months. Perhaps you’re on a variable rate and feel wholly at the mercy of events beyond your control.
But this upheaval cannot last forever, and we can expect a degree of confidence and certainty to return to the mortgage market at some point.
At a time when interest rates look set to go only one way, and when people are already enduring a cost of living crisis, it might also be tempting to bury your head in the sand and ignore what’s going on.
However, help and support is available, so there’s no need to look the other way and not open the letters going through your front door.
If you are concerned about what all this means for your mortgage, there may be several options open to you, such as increasing the term over which your current mortgage is paid, if you can.
But the best option right now is probably to get in touch with your financial or mortgage advisor. We can explain why all this is going on, provide you with the assurances you need and talk you through all the various options open to you.
While we would never seek to underestimate the scale of the market turmoil right now, you should remember that you’re not alone and that we can help you determine what to do next, so you can move forwards with confidence.
*Your home maybe repossessed if you do not keep up repayments on your mortgage.
