Bank of England claims that many will be able to cope with increased repayments
August 10, 2008
The Bank of England has stated that whilst many homeowners are soon due to come off cheap fixed rate deals over the coming months, many will be able to cope with the rise in repayments. Over one million homeowners are due to come off cheap fixed rate deals in the coming year, but the Bank of England states that many of them will be okay when it comes to dealing with increased repayments.
However, according to recent data that was released by the Bank of England over 20% of those that have already come off cheap fixed rate deals this year, and have moved on to more expensive interest rates, have struggled to meet repayments and have found themselves in financial difficulties as a result of the higher repayments. Around 22% on those that have come off low fixed rates have suffered financially according to the data.
The survey showed that of those that were already on variable rate mortgages only 6% had found it difficult to keep up with mortgage repayments. The recent interest rate cut of a quarter point has helped to ease the situation for those struggling with their mortgage repayments in some cases where the lender has reduce the borrowing rate accordingly. However, there are fears that some lenders may not pass on the full rate cut to customers.
Out of those homeowners still on cheap fixed rate deals that are due to end in the coming months, 9% stated that they would look at getting a second job or overtime in order to make it easier to keep up with repayments. Another 40% said they would make cutbacks in other areas to ensure that they kept up with mortgage repayments.
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