Are You Facing A Mortgage Increase?

As many as 1 in 3 homeowners with a mortgage could be faced with financial problems. This is about 5.5 million people across the UK who may find any further increase in mortgage costs make it very difficult for them to keep up with rising monthly repayments.

At present people spend 53% of their take home pay on debt repayments. With many already struggling to pay their monthly bills, at least 12% of homeowners have already missed their mortgage repayments over the past 6 months. The consumer research company, Mintel, who have filed this report, say that it is more likely to affect borrowers who are classed as 'non-standard' such as the self-employed, or those who are divorced, or those with bad credit who have been sucked into the sub-prime market because they are seen as a higher risk for lenders.

Lenders and banks are offering less favourable loan and mortgage deals as well as becoming stricter with their lending criteria. This could end up with even less people being able to buy a property because they cannot get the finances they need.

The worry is that those who are struggling, will find it increasingly difficult to remortgage due to the stricter rules and unappealing rates, and will be stuck with paying the higher standard rate. Anybody with just one missed payment could find they are lumbered with a higher interest rate if they do remortgage.

The mortgage squeeze could increase the number of house repossessions. In fact the Council of Mortgage Lenders is forecasting about 45,000 repossessions to take place in 2008.