Newly installed chancellor Jeremy Hunt will set out his plans to repair the damage in an autumn statement on Thursday. Here, three people share how ongoing consequences are affecting their mortgage plans.
“I may have to opt out of my pension”
Ross Bryant, a firefighter from London, says his monthly mortgage payments will be cripplingly high when he has to fix them soon and could force his family to move out of the capital. Photo: Ross Bryant/Guardian Community Ross Bryant, 33, a London firefighter who lives in New Cross and is the father of an 11-month-old son, is grateful that he and his wife managed to get on the property ladder five years ago, but now finds himself ‘between a rock and a hard place’. “Our 1.7% fixed rate mortgage is coming to an end and we’re looking at what options we have,” he says. “Our broker – who happens to be a trusted friend – recently outlined the best deals for us, which included a 5.34% 5-year fixed, 5.59% two-year fixed or tracker mortgage, which comes with obvious risks that market related. We were looking at around £650 extra in mortgage payments per month. “Then, the next day, the prime rate went up again. Coupled with childcare costs of around £550, we should be coming up with a huge amount of extra money every month. Just wondering: where can I turn? What can I do to make it work?” Like many other homeowners, the couple is slowly coming to terms with the realization that they may have taken on too many mortgages in the first place, when the cost of borrowing was extremely low. “We still have about £330,000 outstanding,” says Bryant. “We understood, of course, when we bought, that the prime rate was at historic lows and was always going to go up. “Our combined family income is between £78,000 and £83,000 each year. My wife, who works in TV, will be going back to work full time in January. We were never broke, we were in a really healthy place financially. Now, we don’t turn on the heat, and if we had to pay a mortgage rate of more than 6.2%, we’d be in the red every month. “I might have to get a second job – a lot of firefighters have to now. My pension contributions are huge, as are all my colleagues: £420 a month, because cancer rates among firefighters are so high. I could choose to free up monthly money, but at the expense of our future standard of living. The fact that many firefighters can no longer afford to live in London – it’s a bit of a mess really. It is very likely that we will have to sell and leave. “We are playing for time now, to wait and see what happens on Thursday [in theautumn statement]. A lot depends on it.”
“We may never be able to buy a house now”
Rosina, a would-be first-time buyer from London, had to put the purchase of her first family home on hold last month. “I’m nine months pregnant and the plan was to live in rented accommodation until the baby comes,” says the 33-year-old, who works in the technology industry. “We graduated in the first recession and only 14 years later were we able to save enough for a decent mortgage, £60,000. “We almost found the house we wanted, about 35 miles from London in Maidstone, Kent. But then the budget threw a wrench in the works. Mortgage deals were being done and we had not closed an offer on that particular property. Subscribe to Business Today Get ready for the business day – we’ll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. “They went from a little more expensive to completely unaffordable. A mortgage rate of 6%, for the £600,000 house we were looking to buy, would mean monthly repayments of around £3,000. We could never afford it, so we had to stop the search for now.” The couple’s house-buying budget has now shrunk to £515,000, which would mean “still very expensive” monthly payments of £2,619 at 5.99%. Like many other properties in the area, Rosina says, the house she and her partner were interested in has been taken off the market following the mini-budget on September 23, but she has seen no drop in property prices in areas that have look inside. “We are back to square one and good interest rates may not return until the recession is over. Rents are already expensive and we are very worried about them rising further, which means we can save less. We’ll probably consider moving further south, but I’m afraid if we don’t buy now, we may never make it.”
“Our chain collapsed and our plans were abandoned”
Richard Price, 85, feels similarly stuck. The pensioner was in the process of downsizing and selling his home in the New Forest in Hampshire for £650,000 when the mini-budget derailed his plan. “My wife and I had found a smaller property that we liked,” says Price. “We had found a buyer for our house and the preparation of the legal documents went smoothly until our short buyer chain collapsed. His buyer jumped and took his house off the market in view of the general condition. “Since the mini-budget, uncertainty has brought the local housing market to a screeching halt. We did an investigation of our house. Everyone is having second thoughts, it seems. “Normally, it’s quite a hotspot. Our agent rang us and offered to drop our price by £60,000, but that would make our move financially unfeasible as the house we like needs some work. Our plans were abandoned.” Price worries that the situation will not stabilize soon. “It could be gap years for people hoping to buy or sell property in the UK. Many people will suffer considerable hardship. We won’t be able to move forward.”
