“I’ve never seen so much panic before, more than the crash of 2008”

Days passed recently when mortgage broker Aaron McElhenney received more than 25 voice messages on his cell phone and each time he answered he received two more.

“I’ve never seen so much panic before, more than the crash of 2008,” says the Derry financial expert. “This time it’s different, as people are pushed back and forth by the cost of energy bills and the cost of mortgages. “

For more than a decade, homeowners in Northern Ireland have been paying low interest rates that have dropped to what a Belfast real estate agent described as “abnormal” levels in the wake of the pandemic.

The economic turmoil caused by the UK government’s latest mini-budget forced mortgage lenders to temporarily withdraw the product and raised fears of a hike in repayment rates by next spring. Some economists had expected the Bank of England to raise the key rate from 2.25% to 5.8%.

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Derry real estate agent Stephen McCarron and colleagues chat while boiling a kettle during a coffee break.

As “the phones keep ringing,” customers have been “more aware of their purchases,” says McCarron, director of Donnybrook Estate Agents.

“Looking at him in isolation, there is panic and fear,” he adds. “We haven’t seen anything like this in a while. But I have to remind people that when Covid-19 came, we had almost the same conversation when the market panicked and people thought it was the end of the world. It wasn’t.

“This time, I think it will affect the market. I don’t see any impact in terms of the value of the property.

“There is a lot of uncertainty – and that uncertainty is fueled by lenders looking back and looking at the market and waiting to reevaluate their products. There are people who fear their mortgages will go up to 10%. They are just hypotheses. .

“We are in a period in which everyone has to catch their breath and take a step back. If lenders come back next week after reviewing their products and it’s not punitive, hopefully things will calm down. “

There are people who fear that their mortgage is at 10%. It’s just a guess

McCarron, chairman of NAEA Springs, the UK’s representative body for estate agents, recently held a regional executive council meeting with colleagues representing 17,000 members.

“At that time, no real estate agent removed anyone from the sale,” he said. “The only thing is that one member noticed that a mortgage offer had been withdrawn. “

Last week, the UK government announced a radical change to Chancellor Kwasi Quarting’s plans to eliminate the higher tax rate for high incomes. The move led markets to expect mortgage rates to spike to 4.96%, down from 6%.

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One of Antrim’s financial advisors said he had received calls from “confirmation” clients.

“In my 34 years of working in financial services, I have never experienced this,” said the consultant, who asked not to be named.

“I got a message this morning from someone telling me that he has become ‘obsessed’ with the expected increase when the fixed rate mortgage expires next spring.

“People are asking you to pull out the crystal ball and tell them if they should transfer their mortgage now and accept the prepayment fee of £ 2,500.

“But the problem is that if there is a turnaround and you end up with a lower offer than the expected price, I will have to face the financial services compensation bill. “

Interest rates were essentially a quarter of a percentage point above zero. That does not make sense. No financial institution will survive this

The Covid emergency measures introduced two years ago have reduced interest rates to 0.1%, the lowest level ever recorded in the Bank of England’s 325-year history. Last December it was raised to 0.25% in response to requests to cope with sharp price increases.

“I was practically a quarter percent above zero. It doesn’t mean anything. No financial institution will be able to survive for this reason, ”says Samuel Dickey, director of Simon Brien Residential in Belfast.

Despite market volatility, Dickey says his company “operated as if nothing had happened.”

“On the ground, what I see is that buyers have not withdrawn from any sales. They show up and bid with the intention of always asking the price, “he says.

“From the anecdotal, I’ve heard that people try to re-approve the terms of the mortgage because they know that when the fixed term expires, they will pay higher interest rates.

“But I think there is a whole group of people who are very used to the fact that our interest rates have been very low for the past 14 years, an unusually long period and an anomalous interest rate of 0.25% for months.

If you remember the boom era of 2006 and 2007, interest rates were 5%. The market was in the stratosphere of value. The average value of our property in 2007 was £ 220,000. Today it is £ 169,000. So we’re not even close to those levels. “

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In the Northwest offices of Smart Mortgages, McElhinney is reviewing hundreds of emails. Twenty minutes ago he learned that Danske Bank was temporarily withdrawing his mortgage products.

“It is a very flexible situation. Right now it’s a guessing game.

“Today I see rates of up to 6.15% for existing customers of a bank. It is very important for them to make sure they get a broker and get the right deal for them.

“A lot of people are afraid, I have to be honest. I’ve had clients calling me with mortgages starting at £ 20,000 to £ 25,000 wondering what it would be like to pay them back if the rate goes up to 10 per cent – and they’ll lose their home.

“There is a lot of uncertainty that leads to panic. We have to take everything apart, wait for the announcements to be made and our heads to be calm. “