Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “These figures paint a of picture of a disjointed mortgage marketplace reeling from spiralling repayment costs. Although the outstanding value of all residential mortgage loans was marginally higher at the end of 2023 Q2 compared to a year earlier, it represented the largest decrease on the previous quarter since reporting began in 2007.
“High mortgage rates continued to dampen enthusiasm for property in Q2, with gross mortgage advances and new mortgage commitments at their lowest observed levels since the second quarter and the third quarter of 2020, respectively.
“Outstanding mortgage balances with arrears have also ticked higher – although it only accounts for just over 1% of outstanding mortgage balances. The upward trend is worrying but not unexpected. History has shown that the uptick in home repossession typically coincides with increases to the base rate. While higher monthly repayments could lead to a rise in mortgage arrears, the record-breaking wage growth run and relatively low level of unemployment could slow the rise in repossessions. However, with the cost of housing on the up, and many homeowners struggling to repay their mortgage, families would be wary that something like a sudden illness or job loss, could leave them homeless.
“There are signs that the mortgage crisis, which has stopped many from participating in the property market this year, may be turning a corner. Average mortgage rates continue to fall from lofty heights seen in July following sizeable falls in inflation, which could mean that interest rates might not peak as high as feared. This is a confidence booster for those looking to take out a mortgage soon.
“While cuts in mortgage rates will be welcome by would-be buyers and homeowners alike, [people] still face much higher monthly repayments than in previous years – and a return of ultra-low mortgage rates isn’t forthcoming.”
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company’s or index name highlighted in the article.
Source: ii.co.uk