Homeowners face the highest mortgage rates for six years after the Bank of England decided to increase interest rates to 5.75% this week.
This has prompted concern from debt counsellors and property experts that the rise will push struggling homeowners over the edge, forcing them further into debt, and raising the prospect of increased mortgage arrears and repossessions.
With rates expected to rise yet further, to 6%, before the year is out, this means more and more homeowners could be facing a financial crisis.
Robert Bryant-Pearson, of property firm Allied Surveyors told the Daily Express:
“If home owners are stretched much further, a significant increase in repossessions is a certainty. This upward spiral of rate rises must stop or 2007 will see more rate rises than has been experienced in any other year over the past decade.”
This rate rise will add around £16 a month to the bill of a family with an average size mortgage of £100,000. When the last four interest rate rises are factored in, this means that monthly payments on this average mortgage will have risen by £80 in less than a year.
Repossessions increased by 66% to 17,000 last year, and this figure is expected to rise again in 2007.
The Council of Mortgage Lenders has warned that the number of homeowners with mortgage arrears will rise to 130,000 this year, from 105,000 in 2006.
If you find yourself in financial difficulties, rather than waiting till your house is close to being repossessed, Molae Properties may have a solution that suits your situation.