View more on these topics

Rising mortgage payments plunge three million Brits into the red

Three million people in the UK have admitted they now struggle financially because of recent rises in their mortgage payments, with just over two million saying they may have to consider selling up if interest rates rise again. Despite interest rates remaining steady this month, the cumulative effect of five rises over the last year has led to millions of Brits facing financial hardship. 

 

Just over half of those people now experiencing financial difficulties, one and a half million, are on a standard variable rate leaving them completely exposed to any further rise interest rates and on some of the highest rates in the market.

 

In addition to those currently struggling to meet their mortgage, another four million say that as little as £40 extra per month on top of their monthly mortgage payments would cause them financial difficulty, of these 1.4 million people say as little an extra £20 a month would give them financial problems.

 

The research also shows that it is older homeowners have been worst hit by a year of interest rate rises. Of the three million people currently struggling, around half are actually over 50. Indeed more over 50s are set to struggle in the future if interest rates rise. Just under a million over 50s believe that a mere £20 on top of what they already pay every month for their mortgage would put them into financial hardship.

 

The impact of just another quarter point interest rate rise on an average 25 year repayment mortgage of £109,000 would be around £210 per year – leaving many homeowners forced to make lifestyle sacrifices to meet their mortgage payments.

 

Mark Chilton, chief executive of Purely Mortgages, says: “We may yet get another interest rate rise this year, and if this happens figures like these are only set to get worse. Although interest rates are still historically low it doesn&#39t take much for people to feel the pinch, especially for older people and those on lower incomes.”

 

Chilton suggests that there has probably never been a better time for borrowers on an SVR to fix.

 

He adds: “Many people are languishing on their lender&#39s SVR, wrongly believing that they are on a decent rate. However, interest rates have risen five times since last November and lenders have taken this opportunity to stretch their margins, with the average SVR now typically 2% higher than base rate. The last time interest rates were at 4.75% was back in September 2001 and borrowers would have been charged 6.5% for Halifax&#39s average variable rate mortgage, the same mortgage would now be charged to borrowers at 6.75%.”

 

Recommended

EXCLUSIVE: Stewart Wright steps down as MD of B&W Mortgages

Wright will retire from the post he has held since April 2002 at the end of December. McCormack, currently managing director of Bank of Ireland Mortgages, will take up the reigns as head of the Bank of Ireland subsidiary, B&W Mortgages, from January 1. Wright has worked at Bank of Ireland and Bristol & West […]

Nationwide charts show schools&#39 effect on prices

Nationwide has utilised the Primary School Performance Tables published by the government to compile charts which show schools&#39 effect on local house prices. Alex Bannister, Nationwide&#39s group economist, says: “In the past two weeks thousands of children have started their first year at primary school. “Traditionally, primary schooling is viewed as crucial in providing children […]

Knowing the market is key to buy-to-let success

The findings say key requirements include a hard-headed business assessment of the local housing market, an intimate understanding of the requirements of tenants and thorough research into the amenities of an area.  Location is key for astute buy-to-let landlords.  Nearly three-quarters of buy-to-let properties are within 20 miles of the landlord&#39s own home as this […]

SPML appoints board directors

Melanie Leask has been appointed as director of mortgage servicing, responsible for mortgage servicing, facilities, and management of SPML&#39s mortgage system. Leask joined SPML in January 1998 and was promoted to executive manager mortgage servicing in April 2001, when she also managed the relocation of SPML&#39s servicing function, customer services, collections and securities, from Kensington […]