Bank of England Governor advises mortgage caution

July 11, 2016 by Brendan

Advice & Tips

Following the result of the EU referendum, the Governor of the Bank of England has warned borrowers to proceed with caution when taking out a mortgage.

https://www.beaconfinancialtraining.co.uk/wp-content/uploads/2020/06/cemap-online-and-classroom-training-uk.jpg Carney issued the warning to prospective home owners, stating that the conditions in the UK are continuing to alter following Brexit. He also stated that at some stage of having a mortgage, the borrower will face difficult conditions. Carney added that borrowers should consider the long term affordability of their mortgages, before agreeing to take on a loan. He said:

“You want to be able to ensure that you can service that mortgage even if times are tough, so think about where interest rates will go, where wages will go in the lifetime of that mortgage.”

According to the Governor, he isn’t warning people not to buy a home, but to consider potential factors in future affordability, like changes in career, earnings and interest rates, so that they can still afford the repayments should they be faced with uncertainty in the future.

First time buyers are described as being:

“the more exposed group in comparison with current homeowners who will have built up a proportion of equity they can use as insulation”.

Borrowers who are considering buying property in London have been warned not to maximise their borrowing and to be cautious before taking on a loan to their full capacity. Mortgage advisers are required to study on a CeMAP course, which enables them to offer advice to all potential buyers.