Watford borrowers losing out on homes amid mortgage chaos

Mortgage borrowers have been hit by a record overnight drop in the choice of home loan products as the economic fallout from Friday’s mini budget continues.

Lenders have been pulling loans at a record pace in response to market volatility and sharply rising yields.

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Coopers Estate Agents Watford manager Alex McMorrin has already seen the crisis hit Watford buyers

He said: “I've experienced the effects with a young family who were purchasing a property. The sale was taking longer than expected due to the chain involved and their current mortgage in principle expired.

“With current events, they could no longer afford the property on the new rates offered by their lender, so they were unable to proceed with the purchase.

“Since then, they have struggled to find a new lender and had to withdraw their offer.”

Economists now expect interest rates to more than double to 5.8 per cent by April, from the current level of 2.25 per cent. Interest rates had previously been forecast to hit 4 per cent by next May.

Coopers Estate Agents. Picture: Coopers Estate Agents (Image: Google Street View)

This means borrowers may feel the need to rush to try and lock in offers ahead of future hikes in rates.

Mr McMorrin added: “I think if you can lock in borrowing around three to four per cent for a fixed term it would be sensible right now.

“I can see borrowing reaching over six per cent next year. The last thing you want then is to be stuck on a tracker mortgage.

“It is a risk, of course, especially when you compare today’s rates to what we were offered six months ago, but I feel it’s a better option than you will likely be offered six months down the road.”

For every £100,000 of mortgage, you'll pay roughly £600 a year more for each 1% pt interest rate rise.

Top fixes today are 3%ish more than a year ago (so £1,800 per £100,000).

If UK rates rise to 6%, as some predict mortgages'd likely rise more than another 3% again

BUT...

— Martin Lewis (@MartinSLewis) September 28, 2022

In August, the estate agent described the Watford property market as “very strong” with high demand for mortgages.

He said: “We have not been able to get the stock quick enough for the demand we have been receiving.

“This has resulted in buyers offering their absolute maximum to secure the property they liked.”

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