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ONS report into increased housing costs

ended 09. January 2023

At 09:30 the ONS is publishing a report, entitled ‘How are changes in housing costs impacting households?’. It will focus on the fact people with fixed-rate mortgage deals coming up for renewals are facing significantly higher mortgage costs when they come to remortgage. Housing costs have also increased for those with variable rate mortgages and private renters. Few Qs:

  • Exactly how hard are higher mortgage payments and rents hitting people? Got any examples from the trenches?
  • Are you seeing some people being forced to (or proactively setting out to) sell their property or perhaps give back that car they have on a PCP?
  • Are landlords increasing rents to cope, or is that impossible in many cases as the tenants just don't have enough money to pay?
  • ‘Mortgage shock’ is a term often bandied around. Got any other ways to describe it?
  • Is there a worry people won't have enough left to put aside for tax after housing and energy bills if they are self-employed? Could the housing crisis turn into a tax crisis for the Govt?

3 responses from the Newspage community

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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Only 12 months ago, you could remortgage onto a sub-one percent fixed rate. Now, even if you have 50% equity, the best you can get is 3.49%, a 250% increase. Fix for longer than 2 years or have a smaller deposit and these rates spiral. A 5-year fixed rate with a 10% deposit will now cost you 4.89%. As the recession worsens, gilt rates are likely to increase so I expect peak mortgage pricing to be in late Spring. It's difficult to see what happens next as the Bank of England base rate will reverse in the summer, but the market will dictate government borrowing remains high as confidence in the country diminishes. Landlords are undoubtedly passing on these costs to renters and average rents are hitting people's disposable income hard. I expect a homelessness crisis come the summer.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
There is no doubt that many people are concerned when we sit down and look at the costs of a new mortgage deal, compared to one they are about to roll off. An increase of a few hundred pounds per month on an average mortgage is not uncommon. For many, this has led to a conversation about extending their repayment term to help manage that cost; if they were prudent when rates were low and shortened their repayment term, this is quite simple, but for those that chose to take the low rates as cash in their pocket it can be much harder. For that latter group, it is often a case of talking through their expenses and looking at what could be cancelled or reduced or even considering if they need to re-visit the age they ideally want to retire.
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Graham Cox
Director at Bridging Hub
Self-employed mortgage applicants can typically borrow slightly lower multiples of income than those in employed roles anyway, so the increased cost of living and sharply rising mortgage rates can make it tricky for directors, contractors etc to borrow the amount they want. The sector of the mortgage market I think will be most affected is people with adverse credit. Many will face rates of 6%-8%, depending on the severity of their credit issues, and getting a mortgage or remortgage will be simply unaffordable. However much lower house prices, which I think we'll see over the next couple of years, will help improve affordability.