Any homeowner with a mortgage or first-time buyer who has applied for a mortgage will understandably be concerned right now. The market is currently in turmoil following recent announcements that came from the government's mini-budget on Friday.
After Chancellor Kwasi Kwarteng revealed his and Prime Minister Liz Truss's plan for the economy, hundreds of mortgage deals have been withdrawn from the market following fears that the Bank of England could raise interest rates to save the pound. 3,961 residential mortgage deals were available on Friday but this has dropped by 365 today (September 27) down to 3,596 deals, analysis for the PA news agency found.
With the possibility that interest rates could rise by another 0.75 percent also comes fears that mortgage repayments could rise by another £100 a month by Friday, putting homeowners under even more pressure in the midst of the cost of living crisis.
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So with mortgages in crisis, what does this mean for first-time buyers and homeowners in Greater Manchester? We spoke to mortgage experts and brokers across the region to find out whether or not we should be worried.
Jamie Thompson, a Manchester-based mortgage broker who runs his own company, said: "I wasn’t worried when lenders were taking deals away due to being too busy with too many applications, but this suggests they are now losing confidence in the market, which is a worry.
"First time buyers will likely suffer most as if there is a loss of confidence then lenders tend to no have high loan to value products, which means a larger deposit is required. This is what happened for months during the heights of the pandemic when people went from needing a five percent deposit to three times that almost overnight. I hope that doesn’t happen again.
"That being said, at least a first time buyer can often chose not to buy. But those who already have mortgages that will come out of a fixed rate in the near future will be forced to lock in a new higher rates. Some may chose to sell, but if the people looking to buy require larger deposits they may find it harder than a few months ago."
Jamie says that the recent news has caused concern amongst Greater Manchester homeowners over remortgaging.
"It has spurred a lot of people in Greater Manchester to enquire about remortgaging. Usually most of the people who contact me are first time buyers but almost overnight this has flipped to people wanting to remortgage and ensure they are on the best deal possible" he said.
"I think I’d be worried if I were selling my house right now. The reason being, fewer people will be able to get a mortgage on it as loads of lenders have temporarily left the market. They might come back next week but it’s going to cost my buyers a lot more per month. This could affect what they are willing to pay for my property."
Maurice Kilbride, who runs a Cheadle-based estate agency under his own name, says that despite the initial concern homeowners and first-time buyers should try to stay calm.
"I think it is important to not over react and take a balanced view of the situation. Clearly we are in some very uncertain times and it would seem inevitable that there will be some cooling off in the Greater Manchester property market especially as rising interest rates come off the back of the cost of living crisis," he said.
"We have definitely noticed a reduction in the number of enquiries this week, however there are still a good number of buyers in the market. But there is no doubt it is going to get tougher.
"Rising interest rates and spiralling monthly mortgage repayments are extremely worrying and stressful. If house prices do start to drop, the next problem for some home owners with a mortgage will be negative equity. It is a very worrying time for everyone.
"I have heard stories from other agents around the country, where offers have been pulled overnight as buyers start to get cold feet. We haven’t really experienced it here in Cheadle yet, but I am sure it will happen at some point."
Rob Peters, director of Simple Fast Mortgages based in Altrincham, added his thoughts.
"With increasing house prices, stagnant wages, the cost of living being more expensive and the ability to save a reasonable deposit for a house purchase being harder and harder, it's certainly not getting any easier for first time buyers," he said.
"Mortgage lenders have called a time-out until it is clearer where markets will settle and if the MPC will take any action to increase interest rates. One this is defined, mortgage products will return to the market.
"I would encourage people not to overreact and for those who already have mortgage offers and property transactions in process to 'keep calm and carry on'.
"Whilst we cannot control the economic shambles we are currently in, we can control how we react to it, and make decisions based on known fundamentals, not knee jerk reactions which we might live to regret."
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