Monday, October 2, 2023

The mortgage bubble that could soon burst in London

Landlords in London may face real estate bubble worth £1.4 billion over the next three years, as they’re going to be forced to replace fixed-rate offerings with much more expensive loans. According to experts from the Resolution Foundation, an organization in charge since 2005 of improving the quality of life of British households, the increase in interest rates 0.1% to 4.5% This could mean that payments on these loans will skyrocket for their applicants.

Simon Pittway, one of the chief economists at the Resolution Foundation, forecast that next year annual mortgage payments would rise by approx. 900 million pounds. He himself assured that: “There is still a lot of pain to come.”

According to analyst website Moneyfacts, around 17% of UK mortgage loan stock is in London, For homeowners with mortgages with a two-year agreement and rates of 2%, they will face a rate of 5.38%, while those with a five-year agreement will face a rate of 5.05%.

Simon Pittaway, one of the chief economists of the Resolution Foundation: “There is a lot of pain yet to come”

Inflation is rising while the standard of living is falling

Inflation is rising and the standard of living of most of the people of the country is declining. In its report from the Resolution Foundation, it was specified: “Younger mortgage borrowers will experience greater contraction with higher interest rates.” Furthermore, a study conducted by Stepchange revealed that currently in the United Kingdom 45% of mortgage holders are in an uphill battle to pay their bills,

Ed Davey, leader of the Liberal Democrats, explained: “London landlords are facing a time bomb as rates rise, Rishi Sunak (Prime Minister of UK) can no longer just blame Liz Truss and the results of her mini-budget. This criminal crisis is getting worse on your watch. We desperately need a Mortgage Rescue Fund to save struggling families from losing their homes.”

A Treasury spokesperson has also ruled in on the matter, alleging that this is a difficult time for mortgage holders and they are trying to provide their full support through this. 10% increase in state pension and reduction in electricity bill.

Nation World News Desk
Nation World News Desk
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