Mortgage Bills Set to Increase for 2.8 Million Borrowers.

01/07/2007 by Damian.

Almost three million home owners will face severe increases in mortgage payments when their current fixed rate deals expire.

The council of mortgage lenders estimates that 1.3 Million borrowers took out fixed rate mortgages in 2005 and a further 1.5 million did the same in 2006.  Most of these ‘deals’ will lapse within 18 months. 

Someone paying 4.75% on a fixed deal may end up paying 8% on teh standard variable rate by the end of 2007.  This would see the monthly bil on a £125,00 mortgage rise from £681 to £926 per month.

This problem is not confined to both the overstretched home owners or the housing market in general.  It will create problems far beyond the estimated 2.8 million borrowers on fixed deals as it could affect the UK economy. 

Borrowers unable to meet their mortgage payments and rising interest rates triggered the housing crash of the early 1990’s - these two factors are ‘flirting’ with each other again but will the outcome be the same.

Anyone who thinks they may have financial difficulties in the future should talk to thier lenders at an early stage to discuss steps to improve the situation.

Posted in UK Interest rates | Print | 1 Comment »