Repayments on mortgages reach fifteen year high
July 5, 2007
According to recent figures repayments on mortgages in the UK have reached a fifteen year high, as homeowners on variable rate mortgages struggle to cope with the inflated repayments resulting from four interest rate hikes over the past year.
Interest rates have gone from 4.5 percent in August of last year to 5.5 percent by May of this year. And it is widely predicted that the Monetary Policy Committee will be hiking up the interest rates again in July.
Analysts and economists have predicted that the interest rate will need to continue to rise by a significant amount in order to bring inflation under control, and this means that mortgage payers may still have to cope with further rises in their repayments.
Also, those that are due to see their fixed rate deals expire after taking them out several years ago will be in for a shock, as they have so far managed to escape the effects of the interest rate rises, but will take a big hit of over one percent on their interest rate once their fixed rate comes to an end.
One spokesperson from the Council of Mortgage Lenders stated: “With the impact of May’s interest rate rise still to be felt, many borrowers face higher costs in the coming months. With two million fixed-rate loans coming to an end over the next year and a half, many borrowers should anticipate that their mortgage costs are likely to rise and should be planning ahead.”
The figures relating to the level of mortgage repayments were released by the Council of Mortgage Lenders. Officials from the CML state that the interest rate rises have had a serious effect on affordability of housing in the UK, and that further interest rate rises are set to make this even more of an issue.
Alan Wright
5th July 2007
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