Search data increases by 11% amid any further rate rises
A significant uptake has been observed in the demand for interest-only mortgages in response to rising interest rates. According to data, searches for such deals witnessed an 11% increase from June to July, following a 53% surge from May to June.
This trend is a direct result of the Mortgage Charter’s introduction in June. Several mortgage lenders committed to the charter, pledging their support for clients grappling with repayments. This assistance includes exploring temporary alternatives to their repayment methods, such as availing a mortgage holiday or shifting to an interest-only arrangement for up to six months.
UNDERSTANDING INTEREST-ONLY DEALS
As the name implies, interest-only deals necessitate borrowers to only pay back the interest, leaving the principal loan amount untouched. Although this provides short term relief from full payments, it implies that the loan will need to be settled later, potentially affecting future repayments.
The rise in interest-only mortgage searches in July can be directly attributed to the Mortgage Charter announcement made the previous month. Borrowers are relying on this support as they navigate the new interest rate landscape and broader cost of living pressures.
LENDERS ADJUST FIXED RATES DESPITE BANK OF ENGLAND RATE RISES
Despite the Bank of England’s decision to raise interest rates to 5.25% in early August, lenders have gradually lowered fixed rates over the past two weeks. Data from Moneyfacts revealed that the average fixed rate mortgages continued to reduce, with the average two-year fixed rate currently standing at 6.73%, compared to last week’s 6.76%.
However, the financial strain caused by escalating energy prices and any further interest rate rises suggests that these minor fixed rate adjustments may not significantly alleviate the burden.
>> REQUIRE FURTHER INFORMATION OR HAVE QUESTIONS? <<
If you require further information or have questions regarding interest-only mortgages or the impact of rate rises, please don’t hesitate to contact us. Providing clarity and support during these times is our priority.
Get in touch with one of our mortgage advisers today to learn more about your mortgage options.
Cedar Crest Ltd –
telephone UK T: +44 (0) 203 883 1017,
HK T: +852 6645 4462 – email info@cedar-crest.co.uk
Your home may be repossessed if you do not keep up with repayments.
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