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Home loan increases threaten thousands
Thousands of people are facing increases in their mortgage repayments of up to £200 per month this year, as their home loan deals reach an end.
Over 340,000 householders selected fixed rate mortgage plans in 2003 in order to protect themselves from fluctuations in interest rates and these five-year deals are now coming to an end, figures from Mortgage Monitor show.
According to economists, increases in the Bank of England base rate means that many people now face a 35 per cent rise in monthly mortgage repayments, totalling 1.02 billion, the Daily Express reports.
In addition to rising inflation rates, increased energy costs, higher food prices and soaring oil markets, many homeowners could struggle to repay their home loans as UK interest rates have risen from 3.5 per cent in 2003 to 5.25 per cent today.
Eamonn Rice, chief executive of mortgage adviser mform.co.uk, told the newspaper: “This is the credit crunch hitting home in the mortgage market and the fear must be that some people will get into severe trouble with their mortgages.”
The Financial Services Authority (FSA) has identified 1.4 million homeowners who are ‘at risk’ of defaulting on home loans because they took out a mortgage when rates were lower and must now find a replacement.
A number of UK banks and building societies have pulled offers in recent weeks as a result of market uncertainty, so cheap deals are increasingly hard to find.
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