Citizens throughout the UK are having one of the most difficult times buying new homes than at any other point in the past century. Stagnant wages, increasing unemployment, and rising home prices are making the prospect of buying a house nearly impossible for many people, especially citizens under the age of 35.
The fact that banks are unwilling to lend much money is even more concerning. Now the banks have added another complication that makes the situation even worse: they are still increasing mortgage fees. According to recent research, mortgage fees have increased by 70% in the past 12 months. The average fee for committing to a mortgage has increased to almost £1,500. This is the highest in the history of the country. The average worker makes that amount of money or less in an entire month.
Meanwhile, tens of thousands of home-buyers are looking for a new abode every month. They shop around for the best possible rates and these kinds of fees just add more grief to their lives. Mortgage rates are increasing for many existing homeowners as well. Many homeowners have no choice but to use their credit card or payday loan to pay their mortgage each month. Meanwhile, credit card fees are increasing as well and payday loans charge about 4,000% interest.
According to one research organization, mortgage fees were less than £900 a year ago. They are skyrocketing as struggling banks look to pass more of their financial burdens onto their customers. The highest fees are now over four times that amount.
Increasing mortgage fees have dampened the hopes England’s central bank had for the country when it pledged to keep interest rates low. The Bank of England hoped that it would be able to encourage banks to lend more and at more affordable rates for consumers.
Nevertheless, some experts contend that the increased mortgage fees are not necessarily a bad thing. As long as the larger fees are associated with lower interest rates, customers can still come out ahead, especially if they are looking to take out a large loan.
The problem with this position is that mortgage rates have been consistently low for quite some time. Even though mortgage rates have been declining consistently, they are no longer doing enough to offset the rising fees. This is likely to make the financial burden even worse for customers for a long time to come.
According to Paul Smee, Director of the Council for Mortgage Lenders, many people may now be unable to achieve their dream of ever owning a home. Smee even went so far as to say that the concept of homeownership is an “unrealistic assumption” for many people.