Homeowners ‘tearing their hair out’ over rising rates and rentson October 6, 2022 at 11:34 pm

- Advertisement -
- Advertisement -
- Advertisement -
- Advertisement -

Whether letting or living in their homes, mortgages are pushing up the cost for many people.

Key in doorImage source, Getty Images

During the financial crisis in 2008, Philip Wilson says he became a somewhat reluctant landlord.

The property market has slowed considerably so he decided to rent out, rather than sell, two properties – a flat and a house in North and West Yorkshire.

Now, the upheaval in the mortgage market means he is being forced to push up the rent for his tenants, and is considering whether he will eventually have to sell up.

“I really feel for my tenants,” the 64-year-old says. “One of them is really struggling, she pays her rent in parts when she has the cash. But now I’m going to have to tell her that her rent is going up. She has been [paying] £395 a month, and it’s now looking like it will go up to £450. That is quite an increase.

“But I’ve swallowed several interest rate rises this year without increasing rents. Now I have to pass them on.

“Hand on heart, once this crisis is over, I’ll be selling both properties. I feel sorry for my tenants but I can’t be a charity.”

He is one of many people pointing out that the rising costs of mortgages affects more people that just the 100,000 or so homeowners a month whose existing fixed-rate deals are expiring.

Landlords, like Mr Wilson, are having to pass on higher costs to tenants if they are on variable rates, which have seen consistent increases throughout the year, or more expensive new fixed deals.

The most obvious change in the last fortnight, following the mini-budget, has been with fixed-rate deals.

Graphic showing average rates for two and five-year fixed rate mortgages

On Wednesday, the interest rate on the average two-year fixed rate mortgage hit 6% for the first time for 14 years, according to the financial information service Moneyfacts.

The following day, a typical five-year fixed rate product had a rate over 6% for the first time for 12 years.

That has left many people unsure and uneasy about what to do next.

Alice Heywood, a digital curator from Edinburgh, has been looking at what the increases mean for her when her current deal expires in June.

“I’ve been overpaying my mortgage by £100 as I’m really keen on reducing the overall term. I was doing well with my current deal. I knew interest rates would go up, of course they would, but I thought it would be an incremental hike, not an overnight jump,” the 47-year-old says.

Alice Heywood

Image source, Alice Heywood

She is facing repayments on a new deal that are £200 a month higher than she had expected.

“It’s so gut-wrenching because I’d been doing all the right things – really trying to reduce my mortgage debt, getting a permanent and stable job. I just feel like the rug has been pulled from underneath my feet.”

While Ms Heywood’s stomach has been churning, Michael Bird says he and his girlfriend have been tearing their hair out.

The 45-year-old from Sheffield was expecting to complete on a house purchase any day, but that is now at risk because first-time buyers down the chain have been unable to secure a mortgage at the higher rates.

“The whole process was taking ages. Now waiting to hear from our solicitors if anything can be done,” he says.

“It’s very frustrating. We have an 11-month-old sleeping in our room and were hoping to have her in her own room by now.

“Now we just have to wait again.”

Chancellor Kwasi Kwarteng met with officials from the major mortgage lenders on Thursday to discuss the situation.

A Treasury statement following the meeting said that “while it is the responsibility of the sector to provide the best value for mortgage rates”, the chancellor confirmed the Treasury would “continue to work closely with the sector” in the weeks and months ahead.

During her speech at the Conservative Party conference, Prime Minister Liz Truss said that the government “will do what we can” to support homeowners.

However, she said that the benchmark interest rate was set independently by the Bank of England.

- Advertisement -




Plans to ban no-fault evictions could be scrappedon October 11, 2022 at 1:34 pm

Ministers are also considering relaxing affordable homes targets, sparking outrage from Labour.Image source, Getty ImagesLong-promised plans to stop landlords in England evicting tenants without...

How the Taliban takeover changed my lifeon October 30, 2021 at 11:51 pm

From office workers to students, Afghans share how their lives have changed since August.

Wood burners: Sale of coal and wet wood restricted in Englandon April 30, 2021 at 11:18 pm

Owners of wood burners and open fires will need to burn cleaner alternatives as new rules come into force.image copyrightGetty ImagesRestrictions on the sale...

Energy crisis: UK expands gas emergency exercise ahead of winteron August 22, 2022 at 11:53 pm

Energy experts warn of supply risks this winter - but ministers insist there will be no blackouts.Image source, Getty ImagesAn emergency planning exercise has...

The moment a woman was saved from rushing flood waters in Chinaon June 25, 2022 at 9:09 am

It took rescue crews multiple attempts to reach the woman who was clinging to her car.It took rescue crews multiple attempts to reach the...