Homeowners resent stubbornly high mortgage rates

At the same time, we have seen annual house price growth slipping into negative territory for the first time since June 2020. According to Nationwide Building Society data, prices in February 2023 were down 1.1 percent on the same month last year – the biggest dip since 2012.

As Robert Gardner, Chief Economist at Nationwide, notes: “While financial market conditions normalised some time ago, housing market activity has remained subdued.” This, he believes, reflects the “lingering impact on confidence”, as well as continued high inflation and mortgage rates being well up on where they were in 2021.

Higher mortgage rates are having a particularly big impact on young homeowners. New figures from the Financial Conduct Authority (FCA) claims that borrowers aged between 18 and 34 are more likely to be financially stretched than other working age adults. The FCA also reports that 356,000 mortgage borrowers could face payment difficulties by the end of June next year. This includes those who are reaching the end of their fixed rate deal, who estimates suggest could end up paying a monthly average of £340 extra on their mortgage.

As the watchdog notes, being stretched does not necessarily mean borrowers will miss payments, as some will be able to rely on savings, cut spending elsewhere or increase their incomes to cover their mortgage costs. While this might help homeowners meet their immediate mortgage commitments, that does not help with their longer-term financial planning, particularly if they are actively working to achieve specific goals.

So if you are among those who are struggling with mortgage costs right now, or are facing a big hike in the size of your repayments, it is well worth asking for advice. You could speak to your lender, for instance, or consult free services such as MoneyHelper.

Speaking to a professional, regulated financial adviser can also be a good idea, as they will take a holistic look at your finances before offering guidance and support. With this approach, any advice will be given with your long-term financial and lifestyle goals firmly in mind, as you do not want to be knocked off course as you are working towards a specific aim.

Making big financial decisions and juggling conflicting interests can be really difficult, as you are managing strong emotions while trying to make sense of technical jargon and details. A professional financial planner will take an objective look at your situation, so you can have confidence and peace of mind that you are making the right decisions at the right time.

Please do not hesitate to get in touch with us if you have any questions about managing your finances in the current climate.