Debt advisors prepare for increased enquiries
March 11, 2008
With thousands of homeowners in the UK due to come off fixed rate mortgage deals in the coming months, debt advisors are preparing themselves for a massive influx in enquiries, as consumers see their mortgage repayments rocket and try to keep on top of their finances. Those affected are homeowners that took out fixed rate deals in 2004 and 2005 for a two or three year period. Many enjoyed a low fixed rate of just 4.24% but with their fixed rate period coming to an end will now see their interest rate shoot up to the lender’s standard variable rate.
With the Bank of England base rate now standing at 5.75% the variable rate charged by lenders is way higher than the fixed rate that these homeowners enjoyed when they took out the deal. This means that some homeowners could see their repayments rocket by 60% or more, and inevitably this will leave many facing a financial crisis, with some even facing the prospect if repossession due to being unable to afford the repayments.
The Consumer Credit Counselling Service has announced that it is setting up a specialist repossession advice unit to deal with the expected increase in the number of threatened repossessions. Around twelve thousand homeowners are due to come off fixed rate deals over the next few months, and although they can switch to another fixed rate deal this will be at a far higher rate than they are currently paying, which could still affect their repayments quite dramatically.
Things may not look as bleak for homeowners that are due to come off their fixed rate deals towards the end of this year, as many analysts are predicting that the Bank of England will cut the base interest rate before the end of the year, and this will enable those coming off fixed rate deals at this time to get a better rate on another fixed rate mortgage.
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