Former fixed rate customers feeling financial pressure
December 30, 2007
According to information from the Bank of England over one fifth of consumers that have come off cheap fixed rate mortgage deals this year have struggled to keep up with repayments on their mortgage as a result of the interest rate altering. The results of a survey involving two thousand people showed that around 22% of those that had been on cheap fixed rate mortgages had struggled to meet their mortgage repayments after their fixed rate period came to an end.
In comparison to this only 6% of those that had already been on variable rate mortgage deals had faced this level of financial difficulty in terms of being able to keep on top of mortgage repayments. The Bank of England has also stated that although over a million mortgage payers are due to see their cheap fixed rate mortgage deals come to an end in the coming year most will be able to cope with higher repayments.
For those that are due to come off cheap fixed rates the interest rate cut announced earlier this month has come as welcome news, as it will ease the impact of increased repayments. Further interest rate cuts are also predicted for the coming months, and this could help to further ease the financial burden for exiting cheap fixed rate mortgage holders.
In a survey consumers on cheap fixed rate deals were polled with regards to how they would manage to keep up with mortgage repayments once their fixed rate period ends. Just under 40% stated that they would make cutbacks on other spending, and 9% stated that they would look at getting a second job or extra hours at work.
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