Mark Carney, Governor of the Bank of England, has warned prospective mortgage borrowers to consider their decisions carefully.
In early July 2016, he warned:
“We are advising people to be prudent. If you are taking out a mortgage, at some stage, during the life of that mortgage, conditions will be difficult.”
With economic uncertainty following Brexit, Carney advised borrowers to make sure that they can still afford their mortgage payments if their financial circumstances change.
The Bank of England does not want to stop loans and is encouraging banks to lend an extra £150bn pounds. This initiative is designed to keep the credit supply in a healthy state.
Carney’s advice has not put off property buyers. There is still a high demand for houses in the property market. Interest rates remain low and this means that many borrowers are finding it a good time to take out a mortgage.
Following up on Carney’s comments, Adam Challis from property firm JLL said:
“What Mr. Carney is rightly trying to say to your average aspirant homeowner is that they should think more fully about protecting themselves from the potential of the downside risks, such as loss of a job, stagnant wages or a decline in the property market.”
One of the best ways to alleviate fears about a borrower’s economic future is to take out a mortgage protection or income protection policy, which will cover mortgage payments if the policyholder becomes unemployed. An insurance broker can find the best deal for this type of protection insurance.