Payments to rise for those with expiring fixed rates
July 2, 2007
Up to a million homeowners in the UK are set to receive a shock as their mortgage repayments soar as a result of four interest rate rises in the space of under a year.
Those on fixed rate mortgages have managed to avoid the sting of these interest rate rises so far, but many consumers who took out a fixed rate mortgage two to three years ago will see this stability come to an end as they are hit with the four interest rate rises all in one go. Interest rates in the UK have risen by 0.25 percent four times since last August, taking the base rate from 4.5 percent to 5.5 percent.
Many of the homeowners that opted for fixed rates several years ago enjoyed a competitive rate because the base rate was lower then.
However, since that time the base rate has gone up and when these fixed rates come to an end many homeowners are going to find themselves facing dramatically increased repayments, and many experts think that this could lead to higher levels of bad debt and increased numbers of repossessions, as struggling mortgage payers default on repayments that could be hundreds of pounds higher than they were on the fixed rate.
According to one analyst some homeowners could see an increase of 25-30 percent on interest payments, and this could lead to real difficulties, particularly for those that took out a relatively large mortgage.
Although there are still fixed rate mortgages available that they could switch to these will be at a far higher rate than their previous fixed rates, and therefore they will still need to make increased repayments compared to what they were paying before.
Alan Wright
2nd July 2007
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I really need some help to get off these high rates - will the interest rate be cut soon?