A mortgage is often one of the most significant commitments a person can make, and the cost is often key. However, due to the difficult financial circumstances brought about by the COVID-19 pandemic, homeowners have been told to keep on the look out. This is because mortgage rates could be about to increase, after significant lows, according to research.
“Until there is more certainty regarding the economic outlook and clarity around risk – which may well not become clear for some months, particularly until the government furlough scheme winds down at the end of October – it seems unlikely that the mortgage sector will bounce back to the levels of availability that we saw six months ago.
“With reports that bank profits may be falling and providers needing to set more funds aside for further coronavirus planning and potential defaults, this could signal the end of the historic low mortgage rates of recent months.”
It follows, then, that many people will be looking to secure a new deal to ensure they can lock in, and take advantage of, the lower rates while they remain on offer.
Thankfully, those who are still struggling with their mortgage can take advantage of the help currently on offer to homeowners.
In March, it was announced homeowners would get additional financial support as a result of the COVID-19 pandemic.
The Financial Conduct Authority (FCA) stated a three month mortgage holiday would be made available to all, to assist during a time of crisis.
Under the scheme, Britons who took a formal mortgage holiday would not be required to make payments during this time period.
The mortgage holiday offer was later extended, meaning more people can take advantage of the opportunity, and potentially temporarily ease a financial burden.
However, homeowners have been advised to think carefully before taking up this offer.
This is because a payment holiday only postpones paying a mortgage, and interest continues to build on the loan during the break.
As a result, Britons may end up paying more on their mortgage, as they have effectively taken longer to pay off the loan.
The property market took a hit back in March, with the announcement of lockdown.
Many mortgage products were withdrawn from the market, and availability was particularly difficult for those looking to buy a house for the first time, or remortgage on an existing property.
It is nevertheless hoped a recovery will take place, allowing the market to return to the pre-lockdown status quo.