This can go for 2 years.
Mortgage interest rates are expanding rapidly in the UK. There are multiple reasons for that.
And the end result? Well, you have got the housing market to slow down.
This means the potential chances will be compromised in case you want to purchase a house. In these areas, maybe a mortgage can be of good value. But then again, you have got the housing slowing you down.
And what is the main problem we see here?
The inflation in living costs. After the impact of COVID-19 and the present war between Russia and Ukraine, living costs in the UK have surged to a point where people are going to food banks to get their supplies.
In order to know more about the situation, go through the rest of this post. You will learn what’s precisely happening and what we might do as a nation to overcome this.
Mortgage Rise Paves the way for UK Housing Market Slowdown
Let’s say you are taking no credit check loans no guarantor and that too in a secured way, then you will definitely check the interest rates, now isn’t it?
In that case, you will find the rates made by the Bank of England.
It has been observed that the interest rates have experienced a rise of a total 14 base points in the month of March.
That means an increase of 1.73% in the interest rate.
But the worry does not stop here.
The Bank of England’s monetary policies will probably make a further increase in the rate to tackle inflation.
What Are We Looking at with Mortgage Price Rise
The pandemic made it even tougher.
As per the statistics, people have primarily depended on their savings and loans (personal loans). It is because most of them had their jobs compromised for over two years when the pandemic hit.
If you want to get the details, then these points might do some justice to you.
Here they are:
- Post pandemic life made people go through serious financial issues
- Jobs and earnings have been compromised to a great extent, for which savings goals were distracted
- The loan rates, including the mortgage rates, have gone higher than usual
- The disposable incomes have fallen, creating more issues in employment
- Along with this problem, people are suffering from serious living cost increases due to the war
Circumstances in the UK are not that well.
But before we come to this conclusion, we can talk about some more aspects.
What Reports Are Saying?
The reports and surveys from a variety of sources tell us more about the situation.
The price rise is going to make the housing market slow down because the mortgages are also affected in the same way.
Let’s just look at 4 causes
- The war and economic inflation
- Challenging price rise and living costs
- Inflating food costs
- Low Income or Unstable Income
Now, what the housing market is going through at this moment?
According to reports, the housing market is going to slow down because you cannot get the house price contraction to recover immediately. It needs a total of 2 years to come to its full pace.
Why is that even applicable for mortgages, though?
Well, mortgages are connected with the income of a person. When the income is not substantially high, the chances of loan affordability get significantly low due to poor demands and access to many kinds of mortgage options.
The more the factor of average income or a variable earning, the more the housing market is going to slow down, and we can out mortgage as one of the essential reasons for that.
Does the Problem Get Worse?
Yes, it does if you want to get a solution.
Wait! How do solutions make a matter worse?
Well, considering the efforts from the house building industry, you can expect that there might be solutions.
By altering some regulations and conditions in the construction industry and evaluating house building standards, you can now make it possible to reduce inflation and speed up housing market activities.
But officials have also told us that even doing so wouldn’t be relevant.
Let’s explain this in a simple way.
Let’s say that the UK housing market tried to counterbalance the economic inflation or the high price rise by taking advanced measures in building houses.
The most effective and predictable way of increasing profits is to create more resources so that their price of them goes down.
So, if the industry focuses on making more and more homes or real estate properties, then that can make a significant impact on the market.
When the supply is more, it is natural that the demand is going to increase.
With many products, prices going down are a natural phenomenon.
This is what the UK housing market has tried. We have seen house builders take out bad credit startup business loans guaranteed approval from us in order to invest the money in making more and more homes in order to increase sales.
It is because that is perfectly natural.
But then again, some are not happy with the end results.
It is because of the income statement from borrowers.
Even if you are a direct lender like us, you cannot negate or change the governmental regulations on the percentage rates offered. As lenders, we are also partially bound to follow market rules.
What we can do here is we can talk it out to make another better solution, provided the evidence that the solution we have been thinking about didn’t work.
The lenders from different corners of the country are also saying the same thing.
They said that the mortgage price rise is a reality. Still, people cannot take them out because, on the one hand, you have got the price rises while on the other hand, you got somewhat of an ‘average’ income.
This is important because an average income is not going to get most borrowers a good mortgage deal.
Besides, there is the chance of missed payments, which, in terms, is going to get the borrowers into trouble by paying high-interest rates.
Then you have got high penalties as well.
Is There a Solution?
Not that we know of.
But we might take an alternative route in order to tackle the problem.
There are two situations to worry about when you suffer from a low income.
One, you might lose your job, and your earnings may come to a zero. In this case, missing instalments is natural. But we can always come to a solution when we have a healthy conversation about it.
That is why direct lenders are there.
Two, there is a chance of variable income. If you are running a business, working part-time, or receiving benefits, you might have some sort of difficulty repaying the loan.
Now, this problem cannot be fixed.
However, we can look for a solution that is going to handle the matter smoothly.
You might choose fixed interest loans.
These loans come with a fixed monthly interest rate. Using them, you can definitely get an idea to make loan payments much more organised.
Look at the bright side. You can literally picture the way and the duration of repaying the loan you took out from us.
That means the secured business loan UK you are booking from us can make you stay alert with the repayments as well.
And that is good!
You can still have a good return of investment or ROI out of your mortgage if you talk to us.
Always remember a good conversation solves problems.
So, if you have things to say, let us know in the comment section below!
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