Tipping Point

---

By Kevin PeacheyCost of living correspondent

Misery has been heaped on stretched homeowners and hopeful first-time buyers in recent days.

The cost of a mortgage has Now hit, with The average rate on a two-year fixed deal approaching 7% - surpassing The Level seen after The Liz Truss government's mini-budget.

One million people will see their mortgage bill rise by More Than £500 a month by The End of 2026,

Given The severity of The Situation , you might expect a wave of homes being put up For Sale and The housing market to be in freefall.

In The Market downturn of The 1990s, keys were being handed over to lenders at a rate of 5,000 a month.

But That has not been The case So Far This Time , according to mortgage lenders.

People still face difficult decisions, and many homeowners will be put under financial strain, but here are six factors That may explain why we may not see a repeat of crises of The Past .

1. The chances of losing your home are slim

When somebody falls behind on mortgage payments and shows little prospect of being able to pay, a lender may seek to repossess The property.

However, in The First three months of this year, there were only 750 homes and 410 buy-to-let properties That were repossessed, according to

Banks say they do not want to repossess homes and would much rather come up with a payment plan with their customer.

Everyone's Tipping Point from stretched borrowing to unmanageable debt is different, but The Number falling over The Edge So Far is very low.

2. Higher house prices and savings create a buffer

During The pandemic, there were two significant trends among those whose incomes were relatively unaffected by illness and lockdowns.

The First was a race For Space , which created high levels of demand from homebuyers. That raised house prices sharply.

In turn, That means millions of homeowners have more equity in The property. In other words, The difference between The value of The home and The mortgage is greater. When homeowners come to get a New Deal , That could mean The home loan is not as expensive as it might otherwise have been.

The Second trend was high levels of savings, as spending options such as overseas travel were diminished. Some of That money is Now being used to pay down mortgages.

3. Some stress may have been helpful

When lenders received a mortgage application they would " stress test" The finances of The applicant to see if they were able to afford Interest rates at a higher level before approving it.

Although The Rules have Now changed, it does mean That - Now rates are higher - Some People have not been saddled with unmanageable outstanding loans.

Critics said That stress testing, which began in 2014, meant Some applicants were turned down by lenders, Even though they could have paid The Interest rate at The Time .

Now , lenders are testing applicants to see whether they can cope with Interest rates of 8% or 9% - although each lender's exact requirements are commercially sensitive.

What happens if I Miss A mortgage payment?

4. Buyers and homeowners are being flexible

Faced with a rising Interest rate and more expensive repayments, existing borrowers are considering their options to mitigate The Higher bills.

That could include extending The term of their mortgage - although That does mean That ultimately they will pay more over a longer period of time. However, lenders are encouraging borrowers to discuss what can be done with them or a broker, rather than burying their heads in The Sand .

First-time buyers too are open to changing their plans. At The Treasury Committee hearing in The Commons earlier in The week, Andrew Asaam, homes director at Lloyds Banking Group - The UK's largest mortgage lender, said: " People are either putting down a larger deposit or buying a smaller property because affordability is tighter.

" We won't lend as much Now , so people are moderating what they can afford to buy. "

5. Jobs have been relatively secure

Companies' borrowing costs, just like those of consumers, have been rising. However, So Far , there have been no signs of big staff cuts.

The jobs market remains resilient. So, when someone has a secure job and a regular income, they might still be able to afford higher mortgage bills - Even if it means Some pain and a change of priorities.

Lenders say The Most common reasons for people Falling Behind or having a home repossessed are generally life-changing events such as a job loss, or serious illness.

6. Landlords often don't have a mortgage

The Interest rates being demanded for buy-to-let mortgages are higher than those for homeowners. Often, landlords are on Interest -only deals, leaving them Even more vulnerable to rate rises.

However, MPs heard That , of about 5. 5 million properties in The private rental sector, only about two million are mortgaged.

That means Some landlords may be immune to rate rises.

Tenants might feel The benefit of landlords not needing to pass on higher mortgage rates in higher rent. However, landlords' other costs are rising, As Is The Market rate for rent, so That quickly becomes a more complex Picture .

A modern browser with JavaScript and a stable internet connection is required to view this Interactive .

How much could my mortgage go up by? How much are you borrowing? If you have an existing mortgage enter The outstanding balance left to pay. If not, enter The Total you are looking to borrow. £ How long will you take to pay it back? If you have an existing mortgage enter The Total number of years remaining. If not, enter The Total number of years you are looking to borrow over. years What is your Current . . For those with a mortgage enter The rate for your Current fixed term. For those without a mortgage enter an Interest rate from another source, such as a bank's mortgage rate calculator. Interest rate monthly payment % Choose an Interest rate to compare with… %

At this rate, your payments could change by…

monthly change

to

monthly Total

The Information you provided on your monthly payments would not be sufficient to pay off your mortgage within The Number of years Given .

This calculator does not constitute financial advice. It is based on a standard mortgage repayment formula based on The mortgage size and length and a fixed Interest rate. It should be used as a guide only and does not represent The suitability, eligibility or availability of mortgage offers for users. For exact figures, users will need to approach an official mortgage lender.

Interest rates fluctuate based on The Bank of England's base rate and market Conditions .

Related Topics

Source of news: bbc.com