According to a survey published by The Money Charity, homeowners now have the highest ever levels of mortgage debt.
The October Money Statistics indicate that the average mortgage debt has now exceeded £120,000, reaching £121,678 during August. This is 10% higher than the same month in 2013, when the average debt was £109,487. There are a number of factors experts believe are responsible for this increase. Strong house price increases have had a large impact on mortgages, with house prices in August this year being 5% higher than August 2016. Buyers are having to borrow more to be able to buy their own home, with the average debt being 3.63 times their annual income.
More people are opting for a longer mortgage term, with more 35-year terms. Although this can make a mortgage more affordable, with lower monthly repayments, the overall amount payable is far greater – often by tens of thousands of pounds. As interest rates have recently increased, this and future rises could make it much harder for borrowers to repay their mortgage debt. The Acting Chief Executive of The Money Charity, Steph Hayter, stated that the rising amount of mortgage debt should be a concern for all, especially as interest rate increases could impact on the ability to repay the debt.
Buyers who are not on a fixed rate deal may want to speak to a CeMAP qualified mortgage advisor, who can offer guidance on the most suitable type of mortgage. Reviewing the mortgage loan periodically is advisable to all buyers to ensure the very best deal.
