The rising inflation rates may mean that securing a new or first time mortgage will be difficult this year, iNews reports. Despite a strong demand from those looking to take their first step on the property ladder, the instances of unsecured debt are increasing thanks to the soaring inflation rate. This makes it more difficult to be accepted for a mortgage.
The cost of living crisis, which hasn’t yet been matched by a rise in wages, will be adding to the increased financial burden for many people, and has led to higher levels of borrowing on credit cards. Experts are warning that taking advantage of short-term finance offers can damage your credit score, which makes it harder to get a mortgage.
Peter Beaumont, a financial analyst, commented: “The reality is a number of those who are expecting to buy a home this year are likely to see their mortgage rejected out of hand. With more ‘buy now pay later’ products on the market and the rising costs of everyday items, there is a real risk that people will unknowingly walk into a bad credit score.”
He added: “It’s vital that people understand the impact that even a small amount of debt could have on a lending decision in order to make an informed choice before taking on any additional debt.”
The UK inflation rate is predicted to reach 8% by April, The Guardian warns. This will be the highest point for nearly 30 years, and represents over a year of consistent growth. It is expected that the Bank of England will react by raising interest rates once more in March or April.
Business groups have called for wage rises and tax cuts to combat the spiralling cost of living in the UK, which will shortly be hit by steep increases to energy bills. It is hoped that after the April peak, inflation gradually begin to decrease as the year progresses.
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