The Council of Mortgage Lenders is concerned that home buyers could face a huge rise in repayments when the deals on their existing fixed rate mortgages come to an end.
Due to hikes in interest rates, some buyers could be left paying up to 60% more than current payments. Analysts fear this could lead to a surge in homeowners unable to keep up repayments resulting in repossessions.
This in turn could lead to a confidence blow to the property market. The Council of Mortgage Lenders is mainly concerned about 1.4m borrowers who's deals end in the next 12 months and face payment rises between 30% and 60%. Many will be able to switch to new deals, but others depending on recent credit history and mortgage conditions will have no choice other than variable rate deals.
If you are one of the affected and wish to see how you could be affected, try some mortgage calculators using different interest rates.
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