Experts are sounding the alarm that homeowners “worse could be yet to come” as mortgage rates are expected to rise later this week.
This warning comes after the Bank of England released figures that revealed net mortgage approvals for house purchases saw an increase from 51,100 in May to 54,700 in June.
Despite this uptake in homeownership, mortgage lenders are reminding those attempting to get on the property ladder that further interest rate hikes are coming.
The Bank of England is expected to raise the base rate once more in an attempt to rein in the impact of high inflation in the UK.
One of the consequences of this decision is that mortgage lenders are forced to pass down this rate hike to homeowners which sees their repayments skyrocket.
Steve Seal, the CEO of Bluestone Mortgages, warned homeowners that today’s figures are not a true indicator of how the property market is doing.
He explained: “While it’s positive to see a slight uptick in the number of mortgage approvals, worse could be yet to come.
“We are still facing strong economic headwinds, and as lenders continue to increase rates and pull deals, affordability will remain a key challenge for would-be and existing borrowers.
The mortgage expert highlighted the importance of homeowners reaching out for guidance if they have any concerns about rates or repayments.
Mr Seal added: “For those who are concerned about the current environment and how it will impact their homeownership goals, now more than ever is the time to seek advice from a mortgage broker.
“These professionals are here to support existing and potential borrowers and will be able to signpost them to the best available options tailored to their personal circumstances.
“While the outlook may appear gloomy, it is our industry’s duty to remind people that the homeownership dream can still live on.”
As it stands, the Bank of England’s base rate is sitting at five percent and is expected to rise for the 14th consecutive time later this week.
Most financial analysts are betting on a 0.25 percent rise, however, some are not ruling out a 0.50 percent hike due to inflation remaining relatively high.
According to the Bank of England’s Money and Credit report for June 2023, the “effective” interest rate on newly drawn mortgages rose by seven basis points to 4.63 percent.
The term “effective” rate is used to describe the actual interest rate paid by homeowners.
The central bank’s Monetary Policy Committee (MPC) will announce any further changes to interest rates on Thursday, August 3, 2023.
Source: Expressnews.co.uk