Cheap fixed rate homeowners see light at end of tunnel
June 6, 2008
Customer who are on cheap fixed rate mortgages that are due to come to an end are finally able to see the light at the end of the tunnel after months of fretting over how they will manage to keep up with repayments once their low fixed rate comes to an end. Over the last half of last year many people voiced their concerns over the repayment leap that those with cheap fixed rates would face once their fixed rate term came to an end, and many officials predicted that there would be huge rises in repossession levels.
However, industry professionals are now stating that the situation for those due to come off their cheap fixed rates over the coming months does not look so bleak, as interest rates have already come down twice, and there is a chance that they could come down further in March. Most experts are predicting that interest rates may fall another couple of times over the remainder of this year, and each cut provides welcome relief for those set to come off their cheap fixed rate.
An official from the Council of Mortgage Lenders stated: “We estimate that the monthly increase for a borrower coming out of a two-year fix and choosing a new bank rate tracker will have declined from £140 in the first quarter to £39 in the fourth.” The CML went on to state: “The intensity of payment shock is likely to decline markedly as the year progresses. The level of shock is unlikely to be as great as the FSA suggests if borrowers choose follow-on deals rather than default to the SVR.”
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