Mortgage News Mortgage Repayments To Rise 35 Per Cent Says Mortgage Monitor 1258
Mortgage repayments to rise 35%, says Mortgage Monitor
17 March 2008 / by Joy Tibbs
Approximately 340,000 people profited from low Bank of England base rates in 2003 when they took out five-year fixed-rate mortgages. But when these deals end, homeowners may find themselves paying far more on their home loan each month. The company predicts that the added cost could amount to collective £1.02 billion, or around £250 each.
Mortgage Monitor’s research found that 23 per cent of people with mortgages were concerned about keeping up repayments, while five per cent of homeowners with fixed-rate mortgages did not know how they would cope when their current deal came to an end.
And these worries appear to be having a physical impact on the affected homeowners. Five per cent of people with fixed rates said they had become ill as a result of their mortgage concerns. Meanwhile, 14 per cent of homeowners had experienced insomnia and 17 per cent had fallen out with their partner because of the situation.
Despite this, lending and operations executive at Newcastle Building Society, Steven Marks, question Mortgage Monitor’s findings. “I would be interested to see the basis of the Mortgage Monitor research as an increase of more than 35 per cent seems on the high side,” he says.
“If you consider that mortgage rates were around 4.4 per cent five years ago and you can now find rates of just 5.5 per cent, on a £150,000 mortgage this is an increase of just £138 per month. If we look at average earnings over the same period you can see that monthly pay has increased by £358 per month.”
According to Mortgage Monitor chairman, Les Jacobs, choosing the right mortgage when deals end “will make the difference between making ends meet or facing financial strain or even repossession”. Repossessions are likely to rise this year, particularly when those coming to the end of two and three year fixed rates are taken into consideration.
However, while 11 per cent of respondents said they would ask others to recommend a suitable deal and 40 per cent would ask advice from a broker, 17 per cent said they would simply take a new deal from their existing provider.
Meanwhile, many mortgage companies appear to be throwing an additional spanner in the works by withdrawing deals at very short notice.
According to The Daily Telegraph, Scottish Widows withdrew a number of mortgage products last week, giving brokers 10 minutes’ notice of its decision. This could mean that mortgage applications that have already been agreed by the lender are suddenly no longer available, leaving applicants back at square one.
© Fair Investment Company Ltd