1.75m homeowners unprepared for mortgage increase
05/03/2015
A UK charity has revealed that 1.75 million UK homeowners will never have faced a rise in the Bank of England (BoE) base rate before, meaning they may be unprepared for a rise in their monthly payments.
Analysis from The Money Charity has shown that there has been 1,762,400 first-time buyers since the BoE last increased the UKs base rate, in July 2007. People who received a mortgage after these dates will never have seen their monthly repayments rise, as they saw interest rates fall to some of their lowest levels ever since the financial crash in 2008. More than one million of these homeowners bought their first property when interest rates hit rock bottom in March 2009, meaning they’ve only ever experienced the very lowest rates.
Homeowners have benefited from low interest rates the last over the last 5 years, but due to inflation outstripping wage growth, it has also been harder for people to save any money.
The charity has now warned that a higher payment may take homeowners by surprise, especially because at the moment mortgages are cheaper than ever.
Michelle Highman, Chief Executive of The Money Charity, said:
“No-one knows when interest rates will rise, but when they do mortgage rates won’t be far behind. The 1.75m households who’ve never experienced an interest rate rise could find themselves in for a nasty shock. And even those who’ve had mortgages for longer might have got used to their payments staying the same.
“Before rates rise is the perfect time to get ahead of the game and work out what you can afford, and where you could change your spending habits. We have tools like our free Budget Builder than can help you get started,
“And if keeping up your mortgage payments is already a strain, contact a free, impartial provider of debt advice like StepChange debt charity.”
Need financial Advice?
If you have any personal finance questions related to this news article, then please contact our financial advisers. You can get in touch by asking a question online, calling us on 0800 092 1245, or by arranging a visit.
Share this..
Related stories
HSBC set to attack the UK mortgage market
After announcing a small business fund at the weekend HSBC has today announced a £15 billion cash injection to its UK mortgage operations which will come into play in 2009. This is roughly twice the figure the company lent to mortgage holders in 2007 at the peak of the UK property market. There is hope that the increased stimulus of the £15 billion cash injection will not only assist the housing...
Read MoreNorthern Rock investigation takes in more former employees
The Financial Services Authority (FSA) has broadened its investigation into Northern Rock to see whether any other figures in the company were aware that mortgage arrears figures were not reported correctly to the FSA. This comes at a time when the UK banking industry is again under the spotlight with revelations appearing in the public domain regarding various practices before and during the rece...
Read MoreGood practice guidelines on second charge mortgages
New consumer-facing good practice guidelines on second charge mortgages have been launched by the Finance and Leasing Association (FLA).The measures aim to make clear what mortgage customers who are having problems making repayments will get from their lenders.Consumers should be encouraged to find free and independent advice on their money and a realists repayment plan should be considered, which...
Read MoreIs the mortgage market finally waking up?
It would appear, in one of the more quiet periods for the UK housing market, that mortgage lenders in the UK are now getting ready for a particularly competitive 2010. Over the last few days we have seen the likes of First Direct, Alliance & Leicester, Abbey and Cheltenham and Gloucester slash their rates on fixed mortgages with over 94 mortgage arrangements now offering rates below 4% as opposed...
Read MoreShould you be looking towards a fixed rate mortgage?
Over the last few months we have seen competition increase in the UK mortgage market which has led to a number of standard variable mortgage rates falling to very attractive levels. This has also impacted upon fixed rate mortgages which have also fallen over the last few months. So is it now the time to look towards switching from a standard variable rate mortgage to a fixed-rate mortgage? Even...
Read More