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Resilient property market “offers hope” amidst high interest rates and missed mortgage payments

Experts say that even with high interest rates and prices, there has been a jump in mortgage enquiries.

As the Bank of England holds interest rates steady at 5.25 per cent, mortgage holders facing renewal later this year may feel frustrated by the prospect of increased monthly repayments. However, despite the challenges posed by the UK’s battle with high inflation and the rising cost of living, there are reasons to remain optimistic about the housing market’s resilience and the value of homeownership.

Nathan Emerson, CEO of Propertymark, expressed confidence in buyers’ ability to adapt to the new market conditions following the central bank’s announcement.

“Our own Housing Insight Report discovered that there has been a 4 per cent increase in the number of potential buyers registered, and an 8 per cent increase in the number of available properties to rent, which shows that there are some reasons to remain optimistic that the housing market is recovering from shock economic factors from the last three years,” Emerson stated.

While the interest rate freeze may prove difficult for some, particularly those on fixed-rate deals set to renew in the coming months, the housing market has demonstrated its resilience in the face of economic challenges. Homeowners, although facing higher monthly repayments, can take comfort in that their property values have remained stable.

However, the current economic climate has already affected some mortgage holders. Research by Eligible reveals that 670,000 mortgage holders have missed a payment in the past 12 months, and an additional 492,000 are expected to miss a payment in the next six months.

Zahra Hassan, co-founder of Eligible, attributes this issue to the infrequent nature of mortgage renewals, which leaves customers unaware of their options.

“The fundamental problem is that mortgages are a financial product that customers take out only once every 3-5 years. This means that they aren’t regularly engaging with their mortgage and aren’t in the loop of what all their options are,” Hassan explained.

Rising interest rates and increased energy and living costs heighten the risk of default. However, Hassan emphasizes that a lack of awareness about the various options banks can offer to ease financial burdens, particularly on mortgages temporarily, is a key factor pushing individuals from financial strain to actual default.

As the UK continues to navigate the challenges of high inflation and interest rates, the housing market’s resilience offers a glimmer of hope for homeowners. While some mortgage holders may struggle with increased repayments, the overall stability of property values and the growing number of potential buyers and rental properties indicate that the market is adapting to the new economic landscape.

Increased awareness and engagement with mortgage options could help mitigate the risk of default and ensure that homeowners can weather the storm.

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