Nearly half borrowers see monthly mortgage payments rise by nearly £3,000 per year

Nearly half borrowers see monthly mortgage payments rise by nearly £3,000 per year

According to a survey by Bluestone Mortgages, which collated views from 2,000 adults, this is equal to around £2,808 over the year.

Younger borrowers have been hit with the largest increases of £288 per month, against £156 for those aged 55+.

More than half of those who reported a jump in mortgage payments in the last year said it was due to their fixed rate coming to an end, and 40 per cent said it was because they were on the standard variable rate.


Overpay, switch or mortgage holiday

In order to keep up with monthly payments, around 16 per cent of mortgage holders have been overpaying while they were on a lower rate, seven per cent have switched to an interest-only rate and a further seven per cent have asked for a mortgage holiday.

Nearly a tenth said that they had borrowed money from their family and five per cent have borrowed from friends.

Steve Seal, CEO of Bluestone Mortgages, said: “As inflationary pressures and rising cost of living continue to squeeze the nation’s pockets, borrowers are no doubt feeling anxious about how they are going to balance increased mortgage payments with their everyday bills.

“However, there is a glimmer of hope on the horizon as following two consecutive rate holds, lenders are starting to drop their rates, which will ease affordability pressures. For those still concerned, remember that there is help at hand, whether that be opting for a product transfer, asking for a payment holiday or being signposted to specialist support.

“The earlier they engage, the sooner they will receive the tailored support they need for their unique circumstances to make their homeownership dream a reality.”

Over a million mortgage holders with mental health issues cut spending to meet repayments

Over a million mortgage holders with mental health issues cut spending to meet repayments

According to research from Money and Mental Health research, based on a survey of 2,150 adults, around 30 per cent of mortgage holders with mental health issues said they had reduced spending on essentials, which compares to just 21 per cent of mortgage holders without mental health problems.

Mortgage holders with mental health issues were twice as likely, at 29 per cent, to have used savings to make mortgage payments and around 27 per cent said they had cut spending on essential maintenance and repairs to the home. The latter is up from 14 per cent of mortgage holders.

Around half of mortgagors with mental health problems said they would not be able to afford a £200 increase in monthly mortgage payments.

This was estimated to be the typical hike for mortgage holders rolling off a fixed rate by the Bank of England in September last year.

The report said that difficulty maintaining mortgage payments was a source of stress and anxiety but actions from creditors such as “intimidating letters, phone calls and messages when they’ve fallen behind” can “cause huge levels of distress”.

The research also warns that mortgage holders struggling with payments are “missing out on critical support measures from lenders”.

Only 29 per cent of such mortgage holders said they were aware of Mortgage Charter measures and the same figure said that they thought their provider have done a good job in communicating support in the last 18 months.

Over two thirds said that they felt anxious about reaching out to a lender if they were struggling, which compares to under half of mortgage holders without mental health problems.


‘Extremely tough’ for those with mental health issues

Conor D’Arcy, chief executive of the Money and Mental Health Policy Institute said: “The prospect of losing your home because you can’t keep up with payments can be terrifying. That’s why lots of worried homeowners will be relieved to see mortgage rates starting to fall.

“But our research finds that the last year has been extremely tough for many mortgage holders, particularly those with mental health problems. For those coming to the end of a cheap deal in 2024, the outlook can still be a frightening one. That’s why it’s vital that lenders and the government act now to ease the burden on people who are facing impossible decisions just to keep up with their mortgage payments.”

He added: “The good news is there are options available if you are struggling. We’re calling on lenders to make that help as accessible as possible for the one in three mortgage holders with mental health problems.

“When you’re struggling with your mental health, simple tasks like cleaning your teeth can be difficult, never mind picking up the phone to tell your lenders that you don’t know how you’re going to afford your next payment.

“It’s crucial that mortgage lenders understand these practical challenges, identify those at risk and reach out to them through a channel that suits them. Doing that would make a huge difference in reducing the stress that can come with mortgage difficulties, and help people experiencing poor mental health to get the support they need.”

Money and Mental Health said that lenders should be “more proactive in informing and reminding customers of the support on offer, utilising customer data where possible to identify and target customers most at risk of experiencing payment difficulties”.

It added that customer-facing staff should be trained to help people with mental health issues an offer “practical adjustments”.

The firm added that lenders should make support easier to access, such as “routinely recording customers preferences around communications channels and using their preferred channel when reaching out with support”.

Two thirds of advisers see rise in interest-only mortgages – poll results

Two thirds of advisers see rise in interest-only mortgages – poll results

According to a Mortgage Solutions poll, approximately 46 per cent of advisers surveyed said that they had seen a rise in customers opting for interest-only mortgages to some extent, with a further 18 per cent saying they had seen an increase to a large extent.

Almost 36 per cent of advisers said that they had not seen an increase in customers going for interest-only mortgages.

Interest-only mortgages allow borrowers to pay off just the interest on borrowing each month, as opposed to the capital, with the full amount paid back at the end of the term. This means monthly payments can be lower.

UK Finance figures show that there were 702,000 pure interest-only homeowner mortgages outstanding at the end of 2022, which is 6.9 per cent lower than 2021.

However, with the introduction of the Mortgage Charter measures, which allows a customer to temporarily switch to interest-only payments for six months could lead to heightened interest.

The cost of living crisis has also meant there have been more enquiries for this kind of product and the product is especially popular with buy-to-let landlords.

Ben Perks, managing director at Orchard Financial Advisers, said that it was “no surprise” that interest-only mortgages were on the rise.

He continued: “As people come to the end of their fixed rates, the sudden increase in mortgage payments has forced borrowers to consider interest only just to get by monthly. Household budgets have been stretched significantly and people are doing all they can to alleviate the pressure.

“As rates improve, we should see the uptake in interest-only subside. Hopefully borrowers will then return to repayment mortgages where possible. Interest-only mortgages can be an effective short-term solution to help keep the roof over your head and the payments manageable. But failure to review it and ensure an effective repayment strategy is in place can cause havoc in later years when the mortgage term ends.”


‘Significant uplift’ in interest-only mortgages

Greg Cunnington, chief operating officer at LDNFinance, said that the firm had seen a “quite a significant uplift in interest-only and part and part applications” last year.

He explained: “This was no surprise, as the ‘payment shock’ of higher mortgage rates saw clients looking to minimise their monthly payment increases, and interest-only became a popular tool for this.

“We saw a lot of remortgage scenarios where clients had taken advantage of the low interest rate environment to mean their lifestyle had been built around kids at private schools, cars on significant monthly finance payments, as well as becoming used to expensive family holidays and so interest-only was used in some scenarios to get used to budgeting based on higher mortgage rates, to then reassess their best option at the end of the renewed mortgage rate period.”

Sally Mitchell, business manager and senior mortgage broker at The Mortgage Mum, agreed that there had definitely been more enquiries about interest-only as an option when it comes to choosing a mortgage.

“Clients are naturally drawn to the lower monthly payments that result if you are only paying off the interest and not the original capital sum of the loan. This is a direct result of the current higher mortgage rates and the squeeze on household finances due to the increased cost of living.

“It has also made headlines as an option under the Mortgage Charter, announced by the Chancellor in June 2023, whereby the principal lenders agreed to a number of measures to support existing mortgage customers. One of these was for customers to be able to switch to interest-only payments for six months,” she continued.

Mitchell said that interest-only mortgages “carries more risk” as you are left with the initial sum to repay at the end of the term, so it is not usually recommended when buying your primary residence as it may have to be sold off to satisfy the debt.

She said that interest-only was the “preferred method of repayment when it comes to a buy-to-let mortgage”.

“These are often investment properties, so the reduced monthly payment is attractive against the monthly rental income. If you have an interest-only mortgage you need to have a good exit strategy and the sale of the investment property is often chosen leaving any residential home risk free.

“Interest-only is definitely a more risky approach to financing a property versus a capital repayment mortgage.  Everyone’s situation and circumstances are different though, so getting independent advice from a broker is essential,” Mitchell added.


‘Nobody should take interest-only solely to keep the costs down’

Gary Bush, financial adviser at, said interest-only has “always been demanded” by applicants but that’s where financial advisers step in and explain that without a sound debt repayment strategy this could create a “potential high rental scheme for themselves – the only benefit being the equity growth in the property”.

He continued: “We don’t find it surprising that members of the public want to take the lowest possible monthly payments at stretched times like these but, from experience advising, it’s quite a slog attempting to turn the tide at a later date on an interest-only mortgage to capital and interest repayments.

“It’s clear that some applicants with good historical evidence of sizeable annual bonuses being paid in their employment who are happy to agree to utilise this money against their mortgage debt, redemption terms having been taken into account, are good examples of why interest-only for some circumstances is sound advice.”

Scott Taylor-Barr, principal adviser at Barnsdale Financial Management, said that it hadn’t seen an uptick in interest-only recommendations to clients there had been a rise in interest-only conversations.

He said: “After a chat about the pros and cons of an interest-only mortgage, along with looking at the possible lenders and deals they may be missing by opting for that option, as many lenders have very strict rules about what they consider an appropriate repayment vehicle for interest only loans, the vast majority decide that a repayment mortgage is a better way forward for them, but maybe with a longer term to help manage the repayments.”

Michelle Lawson, director at Lawson Financial, continued that interest-only has “always has a place when done correctly”.

She added: “Nobody should take interest-only solely to keep the costs down and this is where advice should be sought to ensure the mortgage can and will be paid at the end of its term.

“Most people have also been scared of interest only due to the previous negative publicity when, for some, it would have its benefits. Interest-only ultimately always depends on the individual carrying out their intended actions to repay the debt.”

Almost three quarters of advisers have seen rise in Help to Buy customers struggling to remortgage – poll results

Almost three quarters of advisers have seen rise in Help to Buy customers struggling to remortgage – poll results

According to a Mortgage Solutions poll, around 37 per cent said that they had seen a rise in Help to Buy customers struggling to remortgage to some extent, whilst 35 per cent said they have seen an increase to a large extent.

Approximately 29 per cent said that they had not seen a change in Help to Buy customers struggling to remortgage at the end of their interest-free period.

A report from The Telegraph found that the number of first-time buyers in arrears had doubled in the last year to 4,845 households.

The Help to Buy scheme closed for applications last year and offered first-time buyers equity loans of 20 per cent, going up to 40 per cent in London, to help them buy new build properties with a lower deposit of five per cent.

The loans were interest free for five years, but for loans taken out between 2013 to 2021, the rate was 1.75 per cent for a year which increased every year by the Retail Price Index plus one per cent. For those who bought more recently, the rate rises by the Consumer Prices Index plus two per cent.

David Hollingworth, associate director for communication at L&C Mortgages, said that the “timing could hardly be worse for those reaching the point where interest becomes chargeable”.

He said: “Mortgage rates have risen rapidly which could see the borrower moving onto a higher mortgage rate at the same time as interest on the Help to Buy loan becomes payable, albeit at a rate that will now look low at a starting rate of 1.75 per cent.”

Hollingworth noted that higher rates along with other cost of living could make it “tougher for those looking to switch”, with some having planned to repay the equity loan after interest-free period assuming that there would be enough equity to draw on.

“The equity may still be there, but the problem may now be more centred on the bigger monthly commitment on the existing borrowing. Borrowing more could be a stretch too far when affordability is inevitably becoming a bigger challenge in a higher rate environment with bigger outgoings,” he added.

He said that some would have the option to leave the equity loan in place and could be wondering if paying off the loan could be bad timing if prices fall.

“The difficult element for Help to Buy borrowers is always in determining the amount that must be repaid as it fluctuates in line with the property value.”

Hollingworth said: “It’s always dangerous to try and second guess the market but we may see more hanging onto the equity loan for longer. Managing the mortgage and understanding the options will be an important area for advisers to help their customers understand the options along with possible pros and cons.

“That will include product transfers as many Help to Buy borrowers will stick with their existing lender rather than take on the cost and time of dealing with the Help to Buy administration.”


Customers could become ‘stuck’ with current lender

Paula Higgins, chief executive of HomeOwners Alliance (HOA), said that the combination of coming off a lower fixed rate deal and paying interest rate on equity loan could be up to 40 per cent of the value of the property.

Higgins added that the trade body had heard of some lenders not offering a remortgage where the equity loan will remain in place and would require the loan to be fully repaid on completion.

“This means that these homeowners with equity loans are likely to be stuck with their existing lender and cannot shop around. Added to the nightmare is that people’s affordability may have changed dramatically since purchasing the property, so could very well fail affordability tests if they were in a position to shop around for a new deal.

“The cost of living crisis and soaring energy bills has eroded people’s wealth, resulting in a rethinking of people’s future plans. Instead of being in a position to upsize in a couple of years after buying their Help-to-Buy property, the reality is that they could very well be looking to move as they can no longer afford their home. And on top of that they need to find cash to pay off the equity loan,” she explained.

Higgins continued that the HOA had detailed advice on how to remortgage a Help to Buy property, with the top tip being to get in contact with a mortgage broker as they can lock in a deal up to six months ahead and compare deals with your existing lender and other lenders.

She added that if people were in financial hardship it was best to speak directly with their lender to explore options like extending the mortgage term.


Help to Buy customers trapped in ‘perfect storm’

Chris Exley, director at Exley Financial Planning, said, that Help to Buy customers were “trapped in a perfect storm” from rising house prices and interest rates.

He explained: “For a variety of reasons, most want to repay the Help to Buy loan as soon as they can. Some can pay cash, others can downsize, but for most of us, this means replacing the Help to Buy loan with a mortgage.

“There’s a sting in the tail. House prices have risen around 30 per cent in the last five years, which means the amount owed to Help to Buy increases by 30 per cent also.

“The result – a £50,000 interest-only equity loan at zero per cent interest is now a £65,000 interest and repayment mortgage at five per cent interest – monthly payments go from nothing to £300 minimum.”

He noted that for many repaying Help to Buy was a “non-starter”, so the remaining options were to sell up or leave it in place.

“The latter restricts remortgage opportunities, but retains an affordable ‘holding pattern’. The hope then is that a fall in house prices, and a settling of interest rates next year would make full repayment viable,” Exley explained.

Rhys Schofield, brand director at Peak Mortgages and Protection, said that extra few hundred pounds had been the “straw to break the camels’ back for many of them, leaving little option but to consolidate their other debts to make ends meet and reduce their overall outgoings.”

Samuel Ewen, managing director at Rosehill Financial Services, said that the interest-free period with Help to Buy “can make it feel like ‘Monopoly’ money, because you don’t have to pay for it right away”.

He continued that he would always discuss future implications with clients, such as rising interest rates and the amount you repay based on the future value of the property.

“More recently, where mortgage rates have risen, the starting Help to Buy interest chargeable may actually be cheaper than raising funds to pay off the loan, but the issue is that some lenders may not take on a remortgage where a Help to Buy loan remains. For those that do, we’ve found that the legal side of the process takes forever and a day,” Ewen added.


Two fifths of renters and mortgage holders struggle with housing costs – ONS

Two fifths of renters and mortgage holders struggle with housing costs – ONS

The Office for National Statistics’ (ONS) report on the impact of the increased cost of living found that this was the case for 34 per cent of people paying a mortgage and 45 per cent of renters. For people part renting and part owning, 42 per cent found it very or somewhat difficult to afford payments. 

However, most people are keeping up with their payments, as the data found one per cent of mortgagors and six per cent of renters had fallen behind. 

As for those who had seen their rent or mortgage payments rise in the last six months, 34 per cent of mortgage holders said there had been an increase compared to 55 per cent of people renting. Among those under shared ownership tenancies, 77 per cent said their housing costs had gone up. 


Impact on minority groups 

People with disabilities were more likely to struggle with housing costs, as ONS found that 45 per cent of disabled adults said it was either very or somewhat difficult to afford their mortgage or rent. This was compared to 37 per cent of non-disabled adults. 

Asian or Asian British adults were the most likely to cite difficulties compared to white adults. The data found that 56 per cent of Asian or Asian British adults found it hard to afford their mortgage or rent, compared to 38 per cent of white adults and 51 per cent of black, African, Caribbean or black British adults. 

Single parents also found it harder than households with at least one adult and one dependent child. The ONS data showed that 61 per cent of households with only one adult and at least one dependent child faced difficulties affording housing costs, compared to 42 per cent of homes with more than one adult. 


Financial resilience 

When asked if they’d be able to save any money over the next 12 months, 54 per cent of renters and 36 per cent of mortgage holders said no. 

According to the data, 52 per cent of renters were financially resilient compared to 78 per cent of households paying a mortgage and 93 per cent of people who own their home outright. 


More pain coming for mortgage payers

Sarah Coles, head of personal finance, Hargreaves Lansdown, said mortgage holders were yet to feel the full effect of the rising cost of living. 

She said: “The ever-tightening squeeze on our finances has been painful for us all, but for some it has been agonising. It has crushed the resilience of single parents, renters, single people living alone and those with long-term illnesses or disabilities. However, this isn’t the full extent of the damage done, because there’s more pain lying in store for those with a mortgage. 

“The ONS figures show that mortgage unaffordability has only risen slightly from the spring, reflecting the fact that 88 per cent of mortgages are fixed. It means we’ve only felt a fraction of the pain lying in wait for those with a mortgage.” 

Coles said Hargreaves Lansdown’s most recent Savings and Resilience Barometer showed that a third of mortgage holders had seen a rise in monthly costs, and this was expected to rise to three in five by next summer. 

She added: “When a household spends 25 per cent of its after-tax income on the mortgage, it’s considered to be at risk of falling behind on payments. In the summer, 23 per cent of people were spending this proportion or more – and by next summer that will rise to 26 per cent. 

“Meanwhile, by the summer 2024, 230,000 of those who are ‘at risk’ of falling into arrears will have cash savings that cover less than three months of essential spending – making them ‘high risk’. Plus, an additional 470,000 will also have unsustainable spending, so they’re at ‘critical risk’. It means that the cost of living crisis for those with a mortgage is likely to last even longer.” 

More than two-fifths of UK adults £215 a month poorer than a year ago

More than two-fifths of UK adults £215 a month poorer than a year ago

The Opinium survey of 2,000 respondents from Bluestone revealed almost two thirds of people are concerned about the impact of the inflationary environment on their ability to afford energy bills.

More than half are worried about the impact of being able to afford their weekly food shop and how the current environment will affect their long-term finances.

Homeownership ambitions are being curtailed with nearly half of mortgage holders concerned about how inflation might impact future payments. Over a third of those looking to buy a home are worried about saving for a deposit and a third of respondents are apprehensive about how the current economic climate will impact their future homebuying prospects.

Brits are economising at the moment with most, or 63 per cent, reducing their energy consumption, and 55 per cent  slashing spending on leisure and hobbies. Over half eat out less often with 51 per cent going out less often overall – and almost half have adjusted their product brand or supermarket shopping habits to economise.


Cost of living crisis creating affordability concerns

Reece Beddall, sales and marketing director, Bluestone Mortgages, said: “Stubborn inflation combined with the ongoing cost of living crisis is creating a new level of affordability concerns across the country, with many potential homebuyers finding it harder to save for a down payment or manage monthly mortgage payments.

“These constraints often eat away at their purchasing power, making it harder for brokers to write business while causing some clients to fall behind on their monthly expenses. Minor setbacks like these can trigger high street lenders to turn away a borrower and force them to reconsider their homeownership dreams. However, it’s our industry’s duty to remind them that there is help at hand and brokers play a crucial role in helping these customers understand the options available to suit their unique circumstances.”

Specialist lender Bluestone Mortgages hit £2bn in new originations in September and expects to hit its next billion milestone more quickly utilising Shawbrook’s capital base and the improving market conditions.

The lender plans further product development in the next six to 12 months around affordability and helping first-time buyers, aiming to launch at the end of this year and beginning of next.

TMPE 2023: Cost of living crisis ‘will continue to be a challenge’ – Cherrington

TMPE 2023: Cost of living crisis ‘will continue to be a challenge’ – Cherrington

Speaking in a fireside chat at The Mortgage and Protection Event, Claire Cherrington (pictured), head of strategic and technology partnerships at Lloyds Banking Group, said: “Until wage growth really catches up with some of the inflationary increases that we’ve seen, in real terms people’s incomes are less than they would have been one or two years ago. So, the cost of living crisis will continue to be a challenge.”

She continued that affordability may be a struggle for some and that there could still be “big payment shocks” for people coming off their current fixed rate deals.

However, she said that there was a difference in payment shocks, explaining that with “smaller ticket value mortgages” typically a lot of customers could not absorb those shocks. When you progress to “higher ticket value mortgages” most of them can absorb the payment shock but they “might not like it”.

Cherrington continued that as a firm it was “really focused” on ensuring it was there for struggling customers.

She noted that the Mortgage Charter had done several things, such as ensuring a product transfer could be secured up to six months beforehand, extensions of mortgage terms, temporary switch to interest-only and a pause on repossessions.

“We welcomed the government stepping in on the Mortgage Charter, anything that can provide some more certainty for customers is really helpful,” Cherrington added.

She continued that it had seen more people taking the interest-only option as opposed to term extensions.

“I think that’s because the people that are coming to us are the people that do need help and actually by moving them onto an interest-only basis it’s a bigger financial benefit monthly for them than if you were to look at extending the term.

“What that’s enabling them to do is just take stock of their financial situation,” Cherrington added.

She noted that as Lloyds embedded Mortgage Charter processes it had “always referenced the need for advice”.

“We think that that is a really important point at which customers should be having advice. We really welcome you [brokers] helping us support customers by talking to them if they are in financial difficulty, the worst thing that customers can do is keep their head in the sand about this.

“So, we really have tried to signal back that where you have a financial adviser or where you have advice available to you, please come and talk to your mortgage broker or your lender,” Cherrington explained.

However, she said that the numbers of people using Mortgage Charter measures was lower than forbearance options introduced during the pandemic.


Purchase market will continue in current state without government intervention

Cherrington said that without some “material government stimulus” the “acquisition market” was unlikely to change too much from current levels.

She noted that the Autumn Statements and the Spring Budget could be key points where the government could intervene into the mortgage market.

Cherrington continued that there were varying figures on product transfer and remortgage opportunities, with ONS figures from last year indicating that there were 1.4 million mortgages maturing this year and one million in 2024.

“I think what that would signal to me is that there would be less opportunity in the product transfer/remortgage space going forward which really means the need to stay in touch with your clients and have that constant engagement is going to be really imperative,” she explained.

Cherrington continued that there is a “massive opportunity” for the broker market as currently 42 per cent of product transfers are done through the intermediary channel.

“There is an opportunity for us to do a better job at making sure that we’re serving those needs on behalf of our customers,” she added.


Consumer Duty puts more onus on protection

Protection was another key area going into next year, with Cherrington adding that Consumer Duty had been “really clear about the need to make sure that the conversation around protecting a customer is had, and had consistently”.

“I think that we as an industry aren’t always brilliant at having the [protection] conversation. We’re not brilliant at having it at acquisition/purchase point, we’re probably less brilliant at then having it at a remortgage point and even less brilliant that having it at a buy-to-let level,” she noted.

Cherrington said that a key “opportunity” for next year would be for brokers to “really think about either having those conversations consistently yourself, or being able to pass those over in a referral module so that the customer is protected”.

“In the in the current economic space income protection and things like that are really helpful for a client, and whilst I appreciate that it’s a difficult conversation to have alongside interest rates going up and so on, I think it is absolutely vital,” she explained.


Over three million adults have missed major payment in last two years

Over three million adults have missed major payment in last two years

According to research from The Mortgage Lender (TML), which surveyed over 2,000 people, found that six per cent of people had missed their usual payments, which includes major expenses like rent, mortgage or credit cards.

Around four per cent of adults say they have missed multiple payments, which the lender said shows a “significant proportion” of the population are being financially squeezed.

Over one in 10 18 to 34-year-olds have missed one of their usual payments in the past two years, which is nearly quadruple the figure for over-55s.

Around six per cent of young people said they have missed multiple payments.

The report added that 10 per cent of prospective homebuyers have missed one or more payments in the past two years, which the firm warned could put them at risk of having their mortgage declined.

The average number of payments missed stands at three with almost a third saying they have missed five or more.

Missed credit card payments account nearly half of all payments, 40 per cent said they had missed a utility bill, 27 per cent missed council tax payments, 25 per cent missed rent payments, 23 per cent miss personal loan repayments and seven per cent miss mortgage repayments.

Peter Beaumont, CEO of TML, said: “The past two years have impacted many people’s jobs and salaries, putting a squeeze on household finances, and with the rising cost of living there is even greater pressure on the nation’s finances. This can all lead an individual to miss a regular payment which then could have a knock-on effect on their access to credit down the line.

“In such a volatile economic climate, it’s important that more people are prevented from falling down a rabbit hole of financial difficulty. The lending market needs to become better equipped to deal with the greater quantities of people who are emerging from the pandemic with adverse credit histories.”

He added: “Rather than penalising people for the consequences of an unprecedented event, the industry should be working together to support those who’ve missed payments so that people, especially aspiring homeowners, aren’t locked out of the market.”

Broker criteria searches focus on ‘maximum age at end of term’ and ‘JBSP’ ‒ Knowledge Bank

Broker criteria searches focus on ‘maximum age at end of term’ and ‘JBSP’ ‒ Knowledge Bank

The sourcing system explained that, while long-standing challenges in the market have remained consistent throughout the year, emerging trends suggest brokers are exploring new strategies to find solutions for their clients.

In its latest Criteria Index for September, the most searched-for terms by brokers are revealed from across the market.

In the residential sector, ‘Maximum Age at End of Term’ is most searched for, underscoring the current caution around lending to older individuals. This reflects possible concerns about repayment affordability as applicants get closer to retirement.

The search term ‘Joint Borrower, Sole Proprietor’ (JBSP) has also surged in the residential sector over the past three months.

Knowledge Bank said this indicates that brokers are still looking for creative ways to handle mortgage affordability in the current economy.


Specialist lending

In buy-to-let, ‘Lending to Limited Companies’ remains the top search, a trend that has been consistent throughout the year.

And in the second charge lending sector, the focus is on maximising borrowing. ‘Maximum LTV’ consistently ranks as the top search term, as people look to leverage their existing property to secure additional financing.

Nicola Firth (pictured), CEO of Knowledge Bank, said: “The criteria searches we’re seeing reflect a population that is having to adapt to a rapidly changing financial economy.

“Whether it’s through new mortgage strategies or maximising investment opportunities, it’s clear that both brokers and their clients are having to think more creatively and act more strategically than ever before.”

One in five using savings to make mortgage payments as rates soar

To reduce costs, 16 per cent have switched from a repayment to an interest-only mortgage and 25 per cent said they were considering this.

Just over one in 10, 12 per cent, said they have lengthened their mortgage term, with 25 per cent considering this, and eight per cent said they have moved to a cheaper home, with 22 per cent considering doing this.

Some homeowners have cut back elsewhere to meet higher mortgage costs with 11 per cent reducing pension contributions and 20 per cent thinking about it, according to the latest Consumer Pulse research from KPMG.

Mortgage rates have been steadily rising following successive rate rises by the Bank of England. Yet in its latest decision it held rates, at 5.25 per cent, and mortgage costs have fallen slightly since.

‘Taking significant steps to manage these higher costs’

Linda Ellett, UK head of consumer markets for KPMG, said: “Whether it’s switching to interest-only mortgages, lengthening mortgage terms, reducing pension contributions, or selling property to move to something cheaper – this higher interest rate environment is causing between 10 to 20 per cent of mortgage holders that KPMG surveyed to take significant steps to manage these higher costs.

“Inevitably, increased household budget and savings being used to pay the mortgage, or higher rent cost, will continue to lead to less money being spent elsewhere within the economy by consumers, which will continue to challenge both retailers, brands and leisure businesses.”

Cutting back on non-essentials and switching supermarkets

Over half, 56 per cent, of the 3,000 people included in the research said they had reduced non-essential spending since the start of the year and just four per cent had increased this spending.

Top of the list for cutting back was eating out, chosen by 70 per cent, followed by takeaways and clothing, which 60 per cent had cut back on.

At the supermarket, 41 per cent of those asked said they were buying more own-brand products, a rise from 30 per cent in September 2022 while 39 per cent said they were buying more discounted items and 36 per cent said they were spending more time looking for bargains on grocery shopping. A third of people also said they had switched to a cheaper supermarket to lower costs.

It comes as many of the major supermarkets have launched loyalty schemes for customers offering cheaper prices to those who sign up. Discount supermarket Aldi was also rated as the cheapest UK shop in September, for the 15th month in a row by consumer group Which?.

A third of consumers (29 per cent) said that they have switched to cheaper shops, while one in five said they are buying more pre-owned items.

Just under a third, 27 per cent, said they were using their savings to pay for essential household costs and the most popular ‘big ticket’ item which people were using their savings towards was holidays.

Average savings pots of £8,000

The average savings pot of those asked was just under £8,000. For those aged 18 to 24, this fell to £2,747 and for those aged 65 and older, it rose to £12,543.

Over a third, 34 per cent, said they feel less financially secure now than they did at the start of 2023 and 21 per cent said they feel more financially secure now than they did at the start of the year.

Ellett added: “As 2023 has progressed we have seen the number of shoppers having to make cost savings increasing. Around 40 per cent of the consumers we survey say they are buying lower cost or promotional goods, with a third having switched to lower cost retailers. One in five say they are buying more pre-owned goods this year, which more positively could also reflect environmental drivers.

“We are also seeing consistent numbers of consumers cutting back on certain non-essential activities in order to save money – with eating out and takeaways continuing to be the most common target for cost cutting.”