New findings issued by Morgan Stanley suggest that there will not be any drop in mortgage rates within the near future, with this potentially leaving some borrowers on lower incomes struggling to repay loans.
The financial advice firm has stated that it expects mortgage rates to remain high for the foreseeable future, establishing themselves at 6% or higher. It said that this figure was clearly where the rates offered by banks were settling at, before adding that it was also a level where the danger of borrowers failing to keep up repayments rises significantly.
According to Mortgage Solutions, the statement issued by Morgan Stanley went on to say that:
“Considering affordability tests carried out by the banks will test rates going to 8%, we believe this will have a material impact on credit supply, house prices and economic growth.”
The company said that it was forecasting that between 30% and 40% of borrowers who fall into the lower income category would find it very hard to keep up their mortgage payments if rates do settle at 6%. It did go on to point out that these borrowers account for just 5% of the total number of people who have taken out a mortgage in the UK though.
Morgan Stanley concluded by saying that it did not think Government intervention would lead to rate reductions.
The support of a professional with the CeMAP mortgage advisor qualification will become more essential than ever for many borrowers, as an intermediary between them and their lender.
