Rate rise could push homeowners into arrears - Money - News - Moneyfacts


Moneyfacts.co.uk News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Rate rise could push homeowners into arrears

Rate rise could push homeowners into arrears

Category: Money

Updated: 06/04/2011
First Published: 06/04/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Just a day before the Bank of England announces its latest decision on interest rates, it has been warned that a rise would push many homeowners into arrears.

Thousands of homeowners in the UK have been helped by low interest rates over the last two years, but there are fears that impending increases could push some into real problems.

The Bank of England will announce its monthly decision tomorrow and while another freeze is the most likely outcome, some analysts have predicted an increase as early as May.

The Consumer Credit Counselling Service (CCCS) has said that it expects to see a marked increase in the number of homeowners who appeal for help when the measure rises.

The charity dealt with 90,000 homeowners looking for help in 2010, who owe an average of 30,160 in unsecured debt on top of their mortgages.

Research found that a 2% increase in mortgage rates would lead to a £307 rise in monthly mortgage payments for clients who are already experiencing financial difficulties.

As the average mortgage payment of a CCCS client is currently £561.61, this would be a 55% increase in monthly mortgage payments, meaning that homeowning clients would have to spend almost £3,700 more a year.

The CCCS is also concerned that struggling debtors are using credit cards to pay their mortgages. If this is the case, interest rate rises in 2011 could have an immediate impact on homeowners' ability to pay their mortgage.

"So many households are just managing to make ends meet, that even a small increase in the cost of their mortgage may push them over the edge," said Delroy Corinaldi, external affairs director for the CCCS.

"As far as possible, families need to think how they could pay such increases and seek help at the earliest opportunity if they feel that they cannot cope."

Find the best mortgage rate - Compare best selling mortgages

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

How much could it cost to get fit in 2017?

We’re almost a week into 2017, and hopefully, many of those New Year’s Resolutions are still going strong. Figures suggest that the most popular resolution is to achieve a healthier lifestyle, but just how much could that ambition set you back?

Over 1 million fall victim to online scams

We all like to think that we’re pretty savvy when it comes to spotting financial fraudsters, yet the rise of online scammers means it can be all-too easy to be hoodwinked - and unfortunately, huge numbers are falling victim.

Financial New Year’s Resolutions

It's that time of the year again: the presents have been unwrapped and the Christmas jumper folded away, and now all that's left is the hangover from the festivities. It's time to sit down and think hard about what you would like to change, and how.