Mortgages are more expensive now than they have been at any other point over the last fifteen years while food prices have hit an all-time high, according to the latest reports.
Data from the Council of Mortgage Lenders (CML) has revealed that it has become more difficult than ever before to secure a mortgage and those who have, are looking at the highest level of mortgage repayments since 1992, while research from The Office of National Statistics has shown that the price of food is running at an annual rate of increase of 6.6 per cent.
The reports will come as bad news for the millions of families and homeowners who are already struggling with soaring utility costs and expensive transport bills.
In October alone, homeowners found themselves sacrificing around 18.8 per cent of their income on mortgage payments alone, while first time buyers were forced to contribute 20.6 per cent – up from 20.4 per cent in September and 17.8 per cent in January. And while the long-awaited 0.25 per cent interest rate cut from the Bank of England provided marginal relief for some, the credit crunch is clearly biting harder into UK families' finances than ever before.
Commenting on the figures, CML Director General Michael Coogan said: "October is the last month we expect lending volumes to be higher than a year ago as lenders and borrowers will behave more cautiously in an uncertain and slowing market environment."
Mr Coogan went on to say that lenders have already responded to the credit squeeze by tightening lending criteria and increasing several loan costs but that overall, he expected lending figures, "to be driven more by supply factors rather than lower consumer demand."
The CML research also pointed to a trend of homeowners moving away from fixed-rate mortgages in October, with levels of new fixed-rate loans falling to 68 per cent from 72 per cent in September. However, while fixed-rate loans have been the best option throughout 2007 with levels consistently at or above 70 per cent, the popularity of variable rate loans is likely to increase in the coming months as the expectation of further interest rate cuts lessens the need for borrowers to lock in and guard against rate rises.
Mr Coogan continues: "For those customers coming to the end of their fixed rate mortgage in 2008, the potential impact of higher monthly payments will be diminished by the fall in bank rate this month and other rate reductions to come early in the New Year."Compare mortgage deals
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