Mortgage deals: a return to the late 2000s?
The great mortgage debate of the day arises yet again, are we to see a repeat of the late 2000s? As 2017 comes to its inexorable close we find ourselves with high levels of personal unsecured and secured borrowing, very willing lenders, high property prices and similarly high inflation. Lenders are beginning to withdraw their low fixed rate mortgages and replace these with fixed rate products with increased fixed interest rates and increased variable rates applying at the end of the fixed rate term.
Add to this a Brexit fear that London will be devalued as a centre of world finance prompting large institutions to consider knee jerking to the continent, lenders beginning to down value properties that are being valued for mortgage purposes, the very likelihood of an imminent interest rate rise and some large developers not managing to secure many new plot reservations in recent months we could be teetering on the edge of another property crash a la 2009.
Arguably as soon as interest rates start rising, by even a quarter of one percent, other rises may well follow soon after. In the very near future we could see borrowers coming out of a fixed rate of say 1.5% into a variable rate of 3 times this. As a large number of house owners with a mortgage live from hand to mouth this could be crippling for many. Additionally the thought of the few remaining borrowers who are still on a base rate tracker going into a variable rate of say 4.5% makes one shudder.
One would hope that the experiences of just a decade ago would ensure we are all prepared but that is probably a pious hope.
This is not legal advice; it is intended to provide information of general interest about current legal issues.