A Liverpool mortgage broker has warned people not to "bury their heads in the sand" as mortgage rates soared following the Tories' mini-budget.
The Tories dealt a blow to the economy with their mini-budget, leaving many homeowners across the country uncertain about how they're going to pay their mortgage and some banks even pulled their products.
The measures announced by Chancellor Kwasi Kwarteng have been labelled a "war on class" and have even been slammed by the The International Monetary Fund. Liz Truss spent yesterday (Thursday, September 29) fumbling through interviews on local radio, failing to give answers on fracking and tax cuts and outline clear plans for the coming months.
Chris Costello, 32, owns CRC Mortgages and is now being faced with waves of concerned clients scrambling to get the best possible deal.
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He told the ECHO: "I’ve had clients calling for months to see if it’s worth paying their penalties to fix in now in fear of rates rising even further. It’s a tough one to give advice on as nobody has a crystal ball which tells us what interest rates are going to be available when their deals are due up.
"We can only give advice based on factual information and knowing exactly what the interest rates will be is outside of our remit."
According to Chris, people are coming to him with a range of issues, he said: "They're worried lenders will pull their offers or their rates will increase to unmanageable levels. They’ve seen news that lenders are pulling out of the market and interest rates doubling and naturally they are worried about if and how this will impact them.
"I have concerns about where this will stop, how will people cope when their deals are due up. There’s already speculation of the Bank of England base rate rising greater than 6%. This means rates would be well above that of the current stress test rates lenders are applying when completing their affordability checks on customers."
Another concern is 'mortgage prisoners'. MoneySavingExpert Martin Lewis describes mortgage prisoners as "homeowners trapped on pricey mortgage deals, and unable to switch to cheaper ones mainly because they don't pass current strict affordability tests".
Chris said: "They'll have limited to no options when their deals are due for renewal."
Chris thinks Liz Truss' changes have been "counterproductive", he said: "The Bank of England are doing the opposite to what she’s trying to achieve, where’s the synchronicity? I feel a lot of the changes brought in by the Conservatives, even before Liz Truss, are counterproductive.
"The changes to stamp duty, taxation on landlords and more recently the potential changes to tenancy agreements. Potentially removing section 21 and making it mandatory to allow pets in properties will only make landlords increase rents and it will be tenants that suffer. I do however, feel there needs to be something to protect tenants against rogue landlords."
Chris' best piece of advice is to seek out a mortgage broker as soon as possible, he said: "Check if your deal is due up in the next six months and get something sorted. If you are on a standard variable rate, review your deal as soon as possible as there is no cap on how high your rate can go.
"If you’re struggling to pay your mortgage, speak to your lender, they have specific teams set up for people facing financial stress. Please don’t bury your head in the sand, it won’t help."
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