Borrowers may experience financial difficulty next year

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by Kay Murchie

It has been suggested by AWD Chase de Vere that some mortgage holders may experience financial difficulty next year, particularly those whose fixed-rate mortgages expire.

Susan Hannums of AWD Chase de Vere said it could be a bit of a shock for some people. Ms Hannums added that increasing energy prices could also stretch household finances and make the situation worse.

The Financial Services Authority is also warning mortgage lenders that next year could be a struggle, particularly as the credit squeeze takes an even firmer hold.

However, Michael Coogan of the Council of Mortgage Lenders said those nearing the end of their fixed-rate mortgages may not be in such a poor position next year.

Mr Coogan said that people are likely to find that their higher monthly payments are less of a shock due to the recent rate reduction announced by the Bank of England earlier this month. Furthermore, experts are predicting further interest rate reductions in 2008.