![]() “There are a lot of factors in play for homeowners, including house prices, inflation figures, and competition among mortgage providers – and as yet, the UK public doesn’t see the situation as requiring Government intervention. Opinium research has shown that 6 in 10 UK mortgage holders are already worried about making their repayments. Matthew Howlett, Research Executive at Opinium, said: “ As rates rise for the fourteenth consecutive time to 5.25%, the pressure continues to build for mortgage holders who are on or about to come onto variable rates. The market will realign to a higher base rate in due course, but today’s latest hike from the Bank of England reaffirms that lenders must double down on a proactive approach to supporting property owners and property buyers who will feel the effects of it.” “But right now, flexibility and communication from lenders remains of utmost importance, helping both existing and prospective clients to borrow responsibly without pulling products out from under them or being too rigid in the terms of loans. However, with modern equity release products now offering customers the ability to service some or all of the interest as well as having the embedded protections of a no-negative equity guarantee and surety of tenure, the combination of flexibility and safeguards can make this an option that can deliver good outcomes for a wide range of different customers. Whether it be a lifetime mortgage or a retirement interest product, all choices come with risks as well as benefits. Rates in the equity release arena start from 6.01%, fixed for life, so now may be the right time for customers to consider whether there may be a different way to manage mortgage debt in older age. “However, the positive news is that the product landscape in later life lending is evolving rapidly and the sector continues to step-up to meet this growing societal need. For those in retirement that typically have fixed incomes and for whom the current cost of living pressures are especially acute, the options can be limited and often not palatable. Ahead of this announcement the average SVR was 7.85% and there is no doubt that even with the Government Support Measures that some homeowners are going to be facing hard choices. “For older borrowers trapped on a lender’s standard variable rate (SVR) this is a particularly worrying time. While inflation is starting to fall, prices are still increasing in real terms and this move will create an unwelcome additional expense for those mortgage borrowers who are stuck on variable rates or who are coming to the end of fixed term deals and looking to remortgage. Will Hale, CEO of Key, said: “Today’s 14th consecutive increase takes the Bank of England base rate to 5.25% which is a figure that was last seen in February 2008. ![]() For the sake of the UK economy, the hope is that this is where rates peak.” “Despite the carnage of the past 18 months, most commercial borrowers have been able to manage their increased interest payments and whilst not thriving, they are surviving. The quicker this translates into an uptick in real estate transactions and new development starts, the better. There is growing evidence the inflation balloon is starting to deflate, as the bitter monetary pill UK consumers have had to swallow starts to take effect. ![]() William Scoular, Head of Private Client Lending at Investec Real Estate, said: “The Bank of England’s decision to hike rates by only 25 basis points indicates that the interest rate rise juggernaut could finally be running out of steam.
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