A third of borrowers will cut back on spending
According to the latest Legal & General Mortgage Mood survey reports that 66% borrowers are confident that they can make their repayments without cutting other spending, while 2% are unsure.
Of those who say they need to economise, 82% say the’ll cut back the amount they spend on hobbies and socialising (82%), 78% will spend less on clothes and 68% will look to reduce their grocery bill. Homeowners in Wales (46%) and the North West (43%) feel the greatest need to economise in order to afford their mortgage, with borrowers in the West Midlands (20%) and East Anglia (23%) the least worried.
The survey also revealed that 44% of aspiring first-time buyers hope to save enough money to put a deposit on a home in the first six months of the year, 14% hope to save enough to buy in the second half of the year and 13% are content to start saving for a deposit in 2013. A quarter (25%) of first-time buyers surveyed are looking to pay off debts in 2013 to be ready to start saving for a deposit in 2014.
Ben Thompson, managing director, Legal & General Mortgage Club said:
“It is concerning that a third of UK homeowners feel the need to cut back on expenditure in 2013 but it is not entirely surprising considering the uncertainty that continues to beset the economy. Ensuring that homeowners budget appropriately to meet the needs of mortgage repayments is very sensible although the fact that so many intend to cut back on groceries and clothing shows that austerity is still biting up and down the country.
“In a recent report we commissioned in conjunction with CEBR entitled ‘A New Normal in the Housing Market’ we examined when the housing market would return to normal and what that normal would look like. The findings revealed that the housing market will remain broadly flat in 2013 and base rate is unlikely to rise from its current position of 0.5%. However, there are some positive signs, as by mid 2013 house prices should start to climb, reaching their 2007 peak of £227,000 by 2015. The mortgage market does look set to benefit in the first half of the year too from fierce price competition on lower Loan to Value (LTV) products. The number of re-mortgages we see approved is also likely to increase in 2013.
“It is encouraging that so many first-time buyers also seem determined to build up deposits over the course of 2013. Unfortunately the picture is still difficult for them as there will still be a lack of suitable housing supply. House purchase therefore looks set to remain quite flat in 2013 and still significantly lower than historical averages. It would help if the Government were able to increase its focus on building new, affordable homes to help these people get a foot on the ladder.”