"Increasingly, UK households have had to contend with cost-of-living challenges, soaring inflation, rising interest rates and now face the real threat of a recession."
63% of UK adults fear the economic downturn could hurt their chances of getting a mortgage in the next twelve months as the cost-of-living crisis begins to hit the housing market, according to a national study by Together.
33% of those questioned had never applied for a mortgage with issues such as saving for a deposit (32%) and concerns about affording monthly payments (17%) key roadblocks to homeownership, particularly in the current inflationary environment.
The majority (57%) of homeowners questioned have also been impacted by the cost-of-living crisis affecting the affordability of their current mortgage, implying they can’t keep pace with mortgage payments as prices continue to rise. This suggests they may be prepared to take drastic action to keep their heads above water, such as one in ten (9%) considering selling altogether.
Almost one in three (29%) said they were looking to fix their mortgage payments for longer to cope with inflationary pressures. 16% said they were thinking of shopping around for a better mortgage deal while a similar percentage (14%) were considering downsizing to free up cash. One in ten (9%) would even consider selling up entirely to make ends meet.
In the new report, economist Dr John Glen warns that as the mainstream market grows, hundreds of thousands of mortgage applications between now and 2030 could fail because would-be borrowers don’t fit into the strict criteria of mainstream banks.
Already an estimated 53% of the adult population fall into one or more criteria category classed as ‘non-standard’ by many high street lenders, such as being self-employed, a first-time buyer or having multiple incomes from ‘gig economy’ jobs.
Pete Ball, personal finance CEO at Together, said: “Increasingly, UK households have had to contend with cost-of-living challenges, soaring inflation, rising interest rates and now face the real threat of a recession. This has created the perfect storm, leaving both first-time buyers and existing borrowers feeling concerned about their financial futures and what this means for their mortgage costs.
“But there are a range of solutions. While there was some relief in the Energy Plan, with prices capped from next month, a longer-term plan is still very much needed. Our research makes clear just how many thousands of potential homeowners could be shut out of the market altogether without adequate support. People looking to remortgage after their fixed-rate deals come to an end may also struggle to find the right solution tailored to their needs.
“As a specialist lender, we understand individuals’ specific borrowing needs in these tough times in a way that a formulaic response cannot and will continue to support those customers who don’t necessarily fit the mainstream mould achieve their property ambitions.”
