Experian today (6 November) published findings that in periods of deflation, headline rates fall to make borrowing more attractive but the value of the debt is no longer exposed to the ‘chipping-away effect’.
In deflationary economic conditions, salaries are more likely to fall than rise, according to James Jones, head of consumer affairs at Experian.
Mr Jones said: “For those taking out a mortgage, it is important that people work out what they can afford, and plan ahead for unforeseen costs that may make repaying debts harder over the years ahead, future-proofing their finances and ensuring they come out the other end with their credit rating intact.
“We’ve created a simple guide to help people considering a mortgage which should help people get the deal that they want, and the loan they can afford.”
The findings also highlight that financial control is a key barrier in securing a mortgage.
An Experian survey of people who were unsuccessful in their mortgage application found that 13 per cent did not know how much money they have left over at the end of the month, 18 per cent did not know what monthly repayments they could afford and 14 per cent did not have a big enough deposit for the property they wanted.