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Buyers will need a 37pc pay rise by next year to secure lending
Saturday 7th May 2022
Buyers will need a 37pc pay rise by next year to secure lending
Buyers will need a 37pc pay rise by next year to secure lending on the average home as rising interest rates price out borrowers.
Remortgaging will also become unaffordable, experts have warned, leading to forced sales and falls in house prices.
Lewis Shaw of Shaw Financial Services, a mortgage broker, said: “A lot of people are going to get absolutely clattered when their fixed-rate mortgages come to an end and there is a big risk that house prices will fall. An awful lot of people will suffer from rate shock.”
Rising interest rates will make it more difficult to get a loan, with the Bank Rate expected to reach 3pc in 2023. This would mean average buyers need to earn another £14,800 a year to qualify for a mortgage.
The Bank of England increased the Bank Rate to 1pc on Thursday, its fourth consecutive increase. Capital Economics, a consultancy, forecast it to hit 3pc by 2023. The Bank also warned over the rising risk of recession, which would bring further financial pressure on households.