Copy article

Rising energy bills, rates and mortgages

ended 06. February 2022

A journalist at the Daily Telegraph wants to know what you 'orrible lot have to say about the impact of higher interest rates and rising energy (and other) bills on borrowers, both first-time and existing. Presumably, lenders will be factoring rising energy bills into their lending criteria so people will be able to borrow less? And rate rises will inevitably be fed through? How else could borrowers be hit? Deadline is just before Songs of Praise on Sunday, as I know you are all people of the cloth.

4 responses from the Newspage community

Copy all

Star Quote
Copy

Dominik Lipnicki
Director at Your Mortgage Decisions Ltd
"More than ever, mortgages being approved is subject to affordability checks so if inflation is higher than wage growth, this can be a real issue for borrowers. The current spike in energy prices, coupled with broader inflation across the board, is squeezing many households hard, and without a doubt some of them will now find it harder to obtain a mortgage. The upcoming national insurance hike will hit people's income even more. Borrowing in 2022 won't be as easy as it was in 2021."
Copy

Editor
Rob Peters
Principal at Simple Fast Mortgage
"It can't be bargained with. It can't be reasoned with. It doesn't feel pity, or remorse, or fear, and it absolutely will not stop, ever, until Boris gets a grip on the economy. Yes, inflation, that long lost adversary not seen since the early 1990, is back. With the cost of almost all good and services, including food, energy and interest rates surging, mortgage borrowers should certainly expect a Judgement Day for mortgage affordability assessments. Mortgage affordability dictates how big a mortgage you can get. Some mortgage lenders ask for specific costs at application stage, and some reference national average indexes. Either way, expect that as the cost of living rises, the amount you can borrow will reduce. The ultimate impact here is that first-time buyers will find it harder to get onto the property ladder, and existing home owners will feel their already stretched earnings squeezed harder each month. Hasta la vista to the days of super cheap borrowing."
Copy

Graham Cox
Director at Bridging Hub
"The more borrowers are forking out on living costs and on servicing the mortgage itself, the less banks will be prepared to lend. So it doesn't matter how much 'pent up demand' there is. If people can't afford to borrow as much, property prices will fall. House price growth has been fuelled by years of ultra-cheap credit. That era looks to be coming to an end."
Copy

Joshua Gerstler
Chartered Financial Planner at The Orchard Practice
"Lenders will look at higher energy (and higher everything else) costs and this will inevitably reduce how much they are prepared to lend to both new and existing borrowers. Furthermore, with higher interest rates, lenders' stress tests will also reduce what someone can borrow. If borrowers are lucky, this will feed through to lower house prices, but don't hold your breath. The property market is anything but rational."