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Fractional Selling: A Real Solution to the Mortgage Rate Crisis Facing UK Homeowners

The housing market has always been a subject of debate in the UK, given its historic importance to both personal wealth and the nation's economy. The current mortgage rate crisis, caused by the drastic rise in UK mortgage rates since December 2021, has plunged many homeowners into a sea of uncertainty and stress.

Towering Rents of UK rental towers

In the past year, private rents have increased so dramatically that many young renters have been forced to move back in with their parents. The easiest conclusion to draw would be that this is due to the greed of landlords, who have increased the rents they charge despite the widespread suffering caused by the worst inflation in decades. However, the data show otherwise.

Refinancing Challenges in the Buy-to-Let Market

Buy-to-let mortgages are typically “interest-only”. Under these, the entire loan amount is repaid in a single instalment at the end of the mortgage term. Interest, however, is paid throughout the life of the mortgage on the entire loan amount. The mortgage rate is typically reset every two or five years.

Financial Pressures on Buy-to-Let Landlords

As a BTL landlord, after making your initial investment, you expect to receive a stream of net positive cashflows throughout the life of the investment and capital gains from an appreciation in the value of the property when you eventually sell it.

What is Equity Release? A Brief Guide for UK Homeowners

Homeowners realize their home equity when they sell their property. However, some financial products enable homeowners without mortgages or with very small mortgages to obtain cash against the value of their home equity without having to leave their property. These are referred to as “equity release” products.

Switch rates or Remortgage? A Real Dilemma

Towards the end of the relevant mortgage rate term, the lender provides the borrower with a new set of two and five year mortgage rates. The borrower selects a new mortgage rate to be applied for the next term of two or five years. This process of selecting a new mortgage rate every two or five years occurs throughout the life of a mortgage is referred to as “rate switching” or “switching rates” or “choosing a deal”.

Fixed vs. Variable: Choosing the Right Mortgage Rate in the UK

A “fixed mortgage rate” is one where the mortgage rate that is fixed at the outset does not change during the relevant fixed mortgage rate period, for example, two or five years. It is not unusual for slightly higher fixed mortgage rates to be offered without the requirement to pay any associated product fees and relatively lower fixed mortgage rates to be offered with a requirement to pay associated product fees.

Trends and Predictions for UK Mortgage Rates in 2024

Understanding the dynamics of mortgage rates in the UK involves delving into some of the workings of the Bank of England (“the Bank”), as it wields considerable influence on the financial landscape of the country.

Pauzible’s perspective on the UK property market

While one can’t claim to have a crystal ball for predicting the future, several factors indicate support for house prices in the UK. Let’s draw some insights from the US and compare them to the UK’s outlook.

UK Homeowners: Navigating the Great Mortgage Crisis of 2023

In the past year, UK households have confronted an unparalleled surge in their cost of living. As consumer price inflation soars to its peak in three decades, numerous individuals are feeling the financial strain. Most notably, homeowners have been stunned by the dramatic escalation in mortgage rates. This article delves into the underlying causes of the current predicament in the UK and offers guidance for homeowners during these challenging times.

Retaining “Buy to Let” Investment Despite High Mortgage Rates

The ebb and flow of the property market has always tested the mettle of investors. Today, many Buy to Let investors are feeling the strain of “negative carry” — where their rental income is lower than the total expenses on their property. It is thus imperative to examine the larger historical and future context before making the crucial decision to retain or sell one’s Buy to Let property investment.

Assessing UK Mortgage Rates: Is Downsizing or Renting a Viable Option

In the current economic climate, with the Bank of England adjusting interest rates and the ongoing cost of living crisis, assessing mortgage options has become a pressing issue for many UK residents. The decision between downsizing or renting is a significant one, requiring a thorough understanding of the UK inflation rate and its impact on fixed rate mortgages, rental payments and UK house prices today.

UK Banks Mortgage Charter: Does it go far enough?

With the Bank of England orchestrating the steepest increases in interest rates in history, mortgage borrowers have been crying out for help. Failure to get support could force many homeowners who are finding their mortgages unaffordable to resort to selling their homes. The government responded by getting the largest mortgage lenders and UK finance to agree to a Mortgage Charter. This piece examines if the Mortgage Charter provides the solution homeowners are looking for

How did owning a home become so unaffordable in the UK?

As of early 2022, the UK’s economy appeared to be moving steadily, with low mortgage rates and controlled inflation. In recent months though, the dream of owning a home in the UK has become increasingly out of reach for many, while homeowners on a mortgage are experiencing a level of financial stress not seen before. The cost of living and the mortgage crisis is exerting severe pressure on household finances. Let’s delve into the complex factors that have contributed to this challenging landscape.

What are the ways to access equity in your home?

In our previous article we showed the significant sums in the United States sitting in homeowners equity.As we discussed when looking at the size of capital we concluded it is such a powerful tool for homeowners who could be looking to tap into their homes and access some cash proceeds. There are several methods in which you can extract equity from your home which are discussed below. Homeowners are increasingly looking at these methods to meet their financial needs or personal goals...

Unveiling the Power of Home Equity: A Comparative Analysis of Housing Wealth in the US

Homeownership has long been regarded as a corner stone of the American Dream. Besides providing a place to call home, home ownership also offers the potential for accumulating substantial wealth through the appreciation of property values and the accumulation of home equity. In this blog post, we delve into the topic of home equity, exploring its size in relation to the housing market and other asset classes in the United States.

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