Over the past few months we have all heard many stories and reports from the Media about the likely impact of the credit crunch and slowing economy with regard to those individuals with mortgages and other home loans. As lenders struggle to maintain liquidity within their books and many borrowers’ fixed rate deals coming to an end this year, we will see the cost of our mortgage increase to the degree where it will have a dramatic effect on our standard of living…….apparently!
It was a pleasant change and quite refreshing to hear a more optimistic view of the current situation from Bob Pannell, who is the head of research at the Council of Mortgages Lenders. In his address to a group of professional financial advisers and mortgage brokers at the Mortgage expo held in Manchester, earlier this week, he said “I believe that the most intense payment shock has already happened, or is happening now, especially on two year fixed rate deals which make up the majority of mortgages due to mature this year” he also commented that the effect of the payment shock has not been nearly as bad as we have been led to believe by the Media and that most borrowers with a mainstream mortgage have been able to cope with any increases.
Mr Pannell’s observations were based on the mainstream mortgage deals, for those individuals with a good credit history, which accounts for the majority of the UK mortgage market. He did agree, however, that those borrowers in the sub-prime sector were not so lucky and many faced a far greater payment shock at the end of their current deal than mainstream borrowers and were less likely to have the strategies to cope with the increased payments required of them.
As borrowers’ deals are reaching the end of their terms, an increasing number of individuals are now seeking professional advice from independent advisers and brokers who have access to a much wider range of mortgage products than just those available on the high street, in fact many brokers are seeing enquiries increasing by up to 50% over the past few months.
