Wednesday 10 August 2022 04:07 PM Britain's 'mortgage crisis' laid bare: Lenders stop accepting new customers and ... trends now

Wednesday 10 August 2022 04:07 PM Britain's 'mortgage crisis' laid bare: Lenders stop accepting new customers and ... trends now
Wednesday 10 August 2022 04:07 PM Britain's 'mortgage crisis' laid bare: Lenders stop accepting new customers and ... trends now

Wednesday 10 August 2022 04:07 PM Britain's 'mortgage crisis' laid bare: Lenders stop accepting new customers and ... trends now

Britain's 'mortgage crisis' looks set to deepen after high street lenders stopped accepting new mortgage applications and homebuyers were warned they face forking out thousands of pounds more annually when their existing deals expire.

Interest rates careering to their highest levels in a decade has spooked both mortgage lenders and prospective buyers - with experts expecting fewer purchases in the coming years as bills surge amid the cost-of-living crunch.

Banks and building societies have already pulled almost 1,000 mortgage deals since this time last year and months before the Bank of England first started dramatically marking up its base interest rate in December. 

After the average repayment term hit a record high of 30 years, at least three high street lenders suspended their offers on new mortgage applications this week, citing an unprecedented increase in demand as prospective buyers race to secure cheaper deals.

Mortgage brokers have also warned some lenders have been caught changing their existing rates up to 'three times-a-week' as they react to ever-increasing rises from the BoE and a surge in customer demand.

Jonathan Rolande, of the National Association of Property Buyers, told MailOnline: 'Ironically we may well see a short buying-flurry as those determined to buy race to bag a lower interest rate deal – even today’s higher rate may look cheap in the coming months.

'However, longer term, once rates and the general cost of living increases begin to bite, we will see fewer first timers and landlords purchasing. 

'The current double digit growth levels will likely then settle to something around 3% to 5% while we all sit out what will be a very tough winter.' 

It comes as homebuyers have already revealed how their skyrocketing mortgage repayments will see them fork out thousands of pounds more annually after lenders hiked their rates to the highest level in almost a decade. 

And there could be fresh headaches for existing homeowners too after figures released last week showed how the average house price in the UK fell by 0.1 per cent month-on-month from June to July - a £365 fall in cash terms - after reaching record highs in June. 

The Bank of England last week increased interest rates from 1.25 per cent to 1.75 per cent - the highest single increase since 1997

The Bank of England last week increased interest rates from 1.25 per cent to 1.75 per cent - the highest single increase since 1997 

Average house prices in the UK fell by 0.1 per cent month-on-month in July - a £365 fall in cash terms - according newly released data from Halifax. It means a typical UK property now costs £293,221

Average house prices in the UK fell by 0.1 per cent month-on-month in July - a £365 fall in cash terms - according newly released data from Halifax. It means a typical UK property now costs £293,221

First-time buyers have also been hit with stark warnings over their property ambitions. 

Josh Williams, 26, is looking to buy his first home with his wife and had a mortgage offer of 2.84% of around £1,700-a-month accepted on a £400k three-bedroom home in Milton Keynes earlier this year.

But as he is forced to wait on a completion date by the property's sellers, he has six months before that original offer expires and he faces a potential £300-a-month increase, leaving him and his wife in the lurch.

If he instead took up an offer at the current average of 4.08%, he would end up paying almost £20,000 more than he would have previously over a five-year fixed period.

Shakir Islam, an independent estate and letting agent based in London, was left stunned when his mortgage broker told him his plans to remortgage were going to cost him an extra £300-a-month

Shakir Islam, an independent estate and letting agent based in London, was left stunned when his mortgage broker told him his plans to remortgage were going to cost him an extra £300-a-month

Rightmove has previously calculated that, with the 0.5 per cent rate hike, a first-time buyer with a £224,943 home on a 10% deposit mortgage on a two-year fix would see monthly mortgage payments increase to an average of 40 per cent of their gross salary, a level not seen since 2012. 

Logistics expert Paul Hammond, 28, who lives in Buckingham, Bucks, saved up throughout the pandemic and planned to buy his first property nearer to his parents' home.

Mr Hammond, who secured a mortgage offer earlier this year but hasn't been able to move into his new flat due to building delays, fears being forced to fork out hundreds of pounds more a month when his existing deal expires.

He agreed a provisional five-year fixed mortgage of £137,200 in February, with the expected completion date of his new home due to be at the start of the summer. 

But now that the anticipated construction date for his home has been pushed back to the end of September, he has been left sweating by the fact his mortgage offer also runs out at the end of the month.

'It is a really frustrating situation and I feel I have been left in the lurch. If I do have to get one of these new offers, I'll be paying about £170 more a month than I would have been if my flat had been built on time', he said.

64% of Britons say rising interest rates worry them 

Almost two-thirds of the public say they are concerned about rising interest rates as the Bank of England considers another hike in the cost of borrowing.

In a poll published by Ipsos this morning, 64 per cent of people said they were fairly or very concerned about the prospect of rising interest rates - a figure that rose to 80 per cent among those aged 18 to 34.

Some 67 per cent said they were worried about the value of their savings, while concern about energy bills and the rising cost of living in general reached 75 per cent and 89 per cent respectively.

The survey, which asked 1,750 British adults about their economic fears on Tuesday and yesterday, also found a quarter had had to dip into their savings to deal with the cost-of-living crisis in the last six months while nearly one in five had seen their household income decrease. 

Some 14 per cent said they had increased the amount they had outstanding on their credit card while 10 per cent said they had fallen behind in paying the bills.

The poll also found levels of economic concern were higher among younger people. While 45 per cent of the public in general said they were concerned about paying the rent or mortgage repayments, that figure was 59 per cent among those aged 18 to 44 but only 22 per cent among those aged between 55 and 75.

Similarly, 58 per cent of 18-44s said they had faced some form of financial difficulty in the last six months, compared to 38 per cent of 55-75s.

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'With everything that's already going on in the world that would definitely be a huge blow.' 

His fears were confirmed by industry experts, who warn first-time buyers are facing an unprecedented challenge in an already overheated housing market.

Trevor Studen, co-founder of rent-to-own platform Kettel Homes, told MailOnline: 'As interest rates continue to rise, this will only become another barrier to entry for first-time buyers. 

'Coupled with the challenges of building good credit, saving your deposit and matching up your affordability to the home you want to own, first-time buyers are struggling to get their foot on the ladder.'

Landlords and homeowners planning to remortgage a property are also facing the sharp end of these new rises, which in turn potentially eats into their primary source of income and any available equity.

Shakir Islam, founder of Lyss Homes, an independent estate and letting agent in London, was left stunned when his mortgage broker told him his plans to remortgage were going to cost him an extra £300-a-month.

Describing the current situation as a 'mortgage crisis', he revealed that, despite rates being hiked by

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