It's fair to say that 2022 has been a pretty rocky year in many ways. Whilst we more or less waved goodbye to the pandemic, we were still experiencing the fallout from its impact on the world, alongside the effects of the Ukraine war and the cost of living crisis.
The economy and the mortgage market in particular have been far from stable in 2022. We can expect this to continue into 2023 as interest rates are expected to stay high and house prices begin to drop.
With the mortgage market still being a major talking point and a lot of change still on the horizon, it's never been more important to work with a mortgage broker and adviser when getting a mortgage or making any changes to your mortgage next year. We spoke to Siobhan Holbrook at Mortgage Light to find out more and this is what she had to say.
The mortgage market is unsettled
At the moment the mortgage market is incredibly unsettled. Over the last few months, lenders have been continuously changing rates as they struggle to deal with the business demands that they are attracting by sourcing at the top of the table. Lenders have also been causing real delays in reviewing documents, leaving buyers with low confidence and deciding to pull out of deals.
However, we do expect to see the mortgage market slow in 2023 due to people's strained financial situations. People who would have otherwise been looking to get onto the property ladder will choose to observe or maybe postpone this step until there is more stability in the economy.
We advise anyone in this position to chat with a mortgage adviser ahead of time to work out when the right time to buy could be, and what they can be doing in the meantime to put themselves in the best possible position.
Navigating a lender's criteria
Arguably the most valuable thing that a mortgage broker and adviser can help with in 2023 is navigating a lender's criteria and pinpointing the best lenders to approach for the best chance of success with a mortgage application. Our vast knowledge and experience in the market mean that we are able to match you with a lender who is likely to accept your mortgage application, meaning you don't risk having a rejection on your record.
Let's say for instance that you are always living in your overdraft. This can make your bank statements a little ‘messy' which is likely to be a red flag for many lenders - so much so that they may choose not to lend to you. However, we know that some lenders out there don't look at bank statements so these are the lenders that we would approach in these particular circumstances.
Get the best mortgage rate
In 2023 when finances will be tight for many, securing a good mortgage rate will have never been more important. If you are remortgaging next year, using a mortgage broker and adviser gives you the best possible chance of getting the best rate available to you.
At Mortgage Light, we work with lenders that will allow us to secure rates ahead of time. So for instance, if your remortgage is due in the next 6-9 months, we may secure the best mortgage rate we can find today but then our remortgage team will keep an eye on the rates to see if anything better crops up. If it does, then we will adjust and swap you to the better rate.
Managing payment shock
When people were originally sold their mortgages, lenders had already factored in whether they could still be able to afford their product if interest rates went up. However, moving into 2023 where interest rates have gone up and so has the cost of living, we're finding that the extra buffer that lenders had factored into affordability actually may have depleted. Additionally, clients may have taken out additional financial commitments since getting their mortgage, such as a new car or sofa.
As a result, people are getting what is known as payment shock when they come to remortgaging. They are not expecting their payments to double and begin panicking about how they will cover this cost. In these instances, a mortgage broker and adviser is there to help assist and navigate these extra costs within the household. We don't want our clients to ever feel helpless and like they are out of options. No matter what the situation, there may be routes we can go down and different mortgage products that we can explore to make the numbers work.
As advisers, we are striving to be ready for whatever happens next in the mortgage market so that we can help our clients make sensible decisions ahead of time. Without this foresight and the help of a qualified expert, someone in a position to get a mortgage or make changes to their mortgage could get themselves into a tricky situation - and now is not the time to be taking risks or making mistakes. We would always advise turning to a mortgage broker or adviser if you are planning on getting a mortgage or making changes to your mortgage in 2023.