Around 1.5 million mortgage owners could face difficulties should rates increase.
According to the leading insurer Aviva, there are a million and a half first time buyers who have never experienced an increase in Bank Rate. This is because the Bank Rate has stayed the same since 2009, while mortgage rates have fallen significantly. Interest rates have been so low in recent times that mortgage costs have been extremely cheap, however even a slight increase in mortgage rates could catch younger buyers unprepared, leaving them struggling to pay any increased rates.
Increase in First Time Buyers
Low mortgage rates have countered the increase in house prices, meaning that a mortgage has remained relatively affordable for a lot young people around the country. The Telegraph says that since the financial crash, the number of first-time buyers has increased from 192,300 in 2008 to 312,500 in 2015. When rates rise however, their monthly outgoings could increase dramatically.
Managing Repayments
Chances are that those with smaller initial deposits underwent stricter “affordability” tests to determine how they would cope with higher mortgage rates. This should mean that recent first time buyers will be able to manage higher repayments. To find out the other implications of higher mortgage rates, you can read the full Telegraph article here.
Taking the first step towards buying a home in Dronfield is an exciting life event, but it can also feel daunting without the right guidance. Understanding the stages of the mortgage and home-buying journey will help you move forward with confidence.
This article sets out the key steps first time buyers in Dronfield will go through, and explains how working with a local mortgage advisor, like Charles James, can make the whole process much smoother.
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