Falling house prices could cost households hundreds

14th December 2022

• Calculator shows homeowners if they could face expensive mortgage repayments

Thousands of homeowners could see expensive increases in their monthly mortgage repayments because the value of their property has fallen.

Somebody on an average home loan of £270,000 who got a 90 per cent mortgage on a two-year fixed rate of 3 per cent in 2021 could face a monthly rise of £499 if they are unable to re-fix their deal because their home is worth less than they paid for it, forcing them to stay with the same provider on a standard variable rate.

Nous has developed an online calculator at nous.co/house-trap which can show homeowners if they are at risk of being caught in a ‘mortgage house trap’ if property prices continue to fall. People can enter basic financial details such as their home’s value and current mortgage, to assess their potential risk.

The calculator shows the most likely outcomes in a personalised report, enabling users to prepare for any financial problems that may lie ahead.

Greg Marsh, founder and CEO of Nous.co, explained: “If you bought a home with a high loan-to-value mortgage of, say, 90 per cent in 2020 you would almost certainly have chosen a very attractive fixed rate deal at around 2.5 to 3 per cent.

“But if that deal ends next year, it is likely that the value of your home will have fallen by as much as 15 per cent. You won’t be able to shop around for another fixed deal or even get one with your current provider because you no longer have that 10 per cent equity in your home.

“Your current lender won’t withdraw your mortgage, but you’ll be forced to stick with them on a standard variable rate which is predicted in 2023 to be double the rate you were originally paying.”

“And that variable rate could be as much as 1.5 per cent higher than you would pay if you were able to shop around for a better fixed deal.”

“Our calculator will allow you to look ahead and plan for the financial pressures you may face in the next 12 or 24 months so the mortgage housetrap doesn’t take you by surprise.”

‍Media contact:

Please contact us at press@nous.co for an embed code for the calculator.