Homeowners and potential buyers have felt “totally helpless” this weekend as thousands wait to find out if their mortgage deals will now cost them hundreds of extra pounds a month, while brokers report people are already pulling out. from the market or preparing to downsize.
Foreign Minister Kwasi Kwarteng mini-budget on September 23 has resulted in 40% of mortgage products are withdrawn in the last week, with many potential buyers still waiting to find out how much they will pay and others being offered higher rates or reduced loan sizes.
“People were worried about the energy crisis and how they were going to heat their houses, but this is a different kind of fear,” said Michael McLaughlin, a mortgage broker in Northern Ireland. “Now it’s ‘Are we going to have roofs over our heads?’ They just feel totally powerless.”
People are responding to the situation in different ways, he said, with some planning to sell their homes and downsize or move in with family members as they can’t afford the increased payments.
Some of McLaughlin’s clients have paid a penalty in recent days to get out of their current fixed-rate mortgage deal to lock in a higher rate now, fearing it could go even higher. “It’s because they’re not willing to wait to get an even higher rate next year,” she said. “They are paying a fine for breaking their contract to do that.”
Meanwhile, a real estate company in your local area has halted its planned development, real estate agents are reporting fewer bookings for viewings, and customers are waiting up to an hour or more to speak to their lenders on the phone.
“It’s like icy fear, the speed at which this has happened compared to [the housing market crash in] 2008. The collapse has been seismic and very fast,” said McLaughlin, who works for Mortgage and Insurance Directions in Newcastle, County Down.
Heather Tang, 34, had already missed out on her dream family home when the chain of buyers collapsed earlier this year. She and her family, who are planning to move from London to Macclesfield, Cheshire, found a different property to buy but are now waiting to find out at what mortgage rate they have been accepted. With the sale of her current home in progress and no clarity from the bank, they have been left in the dark about what the future holds.
“We haven’t agreed on anything, so I don’t know what we’re going to do. I see that people are offered 6% to 10% [interest rates]said Tang, a librarian. “I know house prices are going down, but not that fast and in the meantime we’re a little bit homeless because we still have to sell our house.”
She added: “We can’t really do anything else now. [except wait]. We’re so close to selling our house, so we can’t back down, and we have to move, so there’s not much else we can do.”
Robbie Coffin, 33, an NHS administrator from Aldershot, Hampshire, and his partner had an offer accepted for a two-bedroom bungalow in April. The survey showed that he needed additional work, so they reduced the offer, which was accepted, meaning that although they had previously agreed to a 2.5% fixed rate deal, their new mortgage has not yet been approved.
“We’re in this massive queue that seems to be getting longer to see if it gets approved, but we don’t know if we’ll be able to afford the mortgage if the rate is higher,” Coffin said. “We are in limbo, and that is the worst.”
Others have already given up the search. Louise, a project manager who didn’t want her last name used, had a 2.65% mortgage offer six months ago on a three-bedroom house in Kent with her partner. Last month the seller pulled out, and now the rate increase has led them to postpone any decision to move until 2024. “It’s just not feasible anymore, with interest rates rising and moving costs to London “, said. “A new mortgage offer for the same loan amount would now cost £200 a month more, at least. Meanwhile house prices have risen an additional £20,000 [since March]. It’s really hard, but what can you do?
Rightmove, the property website, said the data showed the number of potential buyers requesting to view properties on Monday and Tuesday of last week was down 3% compared to the same days in the previous three weeks. The number of agreed sales on Tuesday reached its highest level since early August as buyers scrambled to secure a mortgage before rates rose further.
Marc von Grundherr, director of estate agent chain Benham and Reeves, said: “Those who already have their terms have remained largely unhindered, with their sales progressing as planned.
“However, that’s not to say that everyone has, and we’ve seen a handful of cases where banks have pulled the rug out from under buyers by withdrawing their pre-agreed mortgage offers.”
Additional reporting by Jedidajah Otte
THE FIRST BUYER
£180,000 loan on a £200,000 house with a 10% deposit
September 1: NatWest offers a two-year fixed rate of 3.59%. The monthly payment would have been £910 a month.
Oct 1: NatWest offers a fixed 4.39% two-year rate. The monthly payment would be £990 a month.
Cost = £960 a year plus
OWNER
Remortgaging £300,000 on a £400,000 home
Sep 1: Coventry Building Society offered a fixed 3.39% rate for two years. The monthly payment would have been £1,484.
Oct 1: NatWest offers a fixed 4.3% remortgage rate for two years. This gives a monthly payment of £1,634
Cost = £1,800 a year plus
Source: London & Country Mortgage Brokers
‘Previously, buying our first home seemed difficult, but possible. Now it’s completely out of reach’
Earlier this summer, Alex, a charity worker from Sussex, was hopeful that he and his partner, Jo, would be able to buy their first home soon. The couple currently rent a flat in Brighton, where Jo works in the events industry, spending around £1,500 a month on rent, council tax and utilities.
“We had a meeting with a mortgage advisor three months ago,” says the 27-year-old. “We were told we could afford a house just north of £400,000. We were looking for something with bedrooms and a bathroom, really, this area is expensive. But we were very excited.”
“We had another meeting with a mortgage advisor on Friday, right after the mini-budget was announced. We found that our budget has suddenly shrunk to just under £360k, because we would be looking at 5-6% mortgage rates. It felt like they were pulling a rug.
“Things have only gotten worse since then. There are no mortgage agreements that we can apply for at this time. Before it seemed difficult but possible, now it is completely out of our reach.”
Since the initial shock passed, the couple have been looking for homes in areas further from their jobs, but so far, the search has only added to their disappointment.
“We’ve been looking at towns and villages 10, 20 miles from Brighton, like Worthing and Littlehampton,” says Alex.
“On Monday, we saw a property in Littlehampton, we’ve had it booked for a while. I literally had fungus growing out of the floorboards, and all the basement walls were covered in mold. That house cost £400,000.”
Unless the market changes significantly, Alex says, he can’t see how they’ll be able to find a property in a walkable area that’s affordable.
He believes that increasing their deposit from the existing 20% they were hoping to deposit is the only option but, with a combined household income of around £50,000, whatever they set aside could end up being outweighed by rising rates and prices. living place.
“Sometimes I wonder if home prices will go down, which would be great for first-time buyers like us, but terrible for homeowners. Recently, I had to dip into my savings due to rising energy costs and bills. I feel like I’m grieving a loss, because right now I don’t think I can afford a house.”
