Interest rate increase may be too much for overstretched homeowners

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by Elaine Frei

According to figures from The Council of Mortgage Lenders, at the end of 2006, there were around 59,000 mortgages that were 3 to 6 months in arrears and missed monthly mortgage repayments are increasing each year. Following 3 interest rate rises totalling 0.75% in 2007, many homeowners are feeling the pressure.

According to MoneyExpert.com, over 70,000 mortgage repayments are being missed each month and with analysts predicting further rate rises, things could get worse. A spokesperson for MoneyExpert.com said that a missed mortgage payment is an indication of financial distress and the situation should be addressed by talking to their lender as soon as possible.

Tracker and variable-rate mortgages have increased following the interest rate increases which is inevitably pushing up monthly repayments. Around 2 million homeowners will be faced with higher repayments when fixed-rate deals expire.

MoneyExpert.com remarked that it’s a far cry from the early 1990’s when more than one million people lost their home but it’s still becoming a strain for many. People are being advised to cut down spending and reduce debt.