Home Loan payers out of tune with rate change calculations
Almost two thirds of home loan borrowers are unaware as to how slight percentage increases in their repayment rates, would affect the overall cost of their loan.
When a group of home loan payers were posed the question as to how much difference a one percent increase in their loan repayments would actually make, surprisingly, almost 60% admitted to not having a clue but felt it would be negligible, and a remaining 30% hazarded a guess at around £400 to £1000. Unfortunately for all concerned, a percentage increase of this type would on average, equate to a repayment increase of almost £5000.
Commenting on the findings, one expert suggested that the results demonstrated just how out of tune consumers are with their personal finances, and that such ignorance’s have the potential to lead to serious financial difficulties at a later date. It would appear that amongst the hustle and bustle of our daily lives, people are devoting little to no time in planning for financial change, and the fact that so few are aware as to how their credit commitments are actually calculated, obviously makes it all the more difficult.
In related news, analysts predict that record numbers of homeowners will declare themselves insolvent in the early parts of 2008, and it is also predicted that the number of home repossessions will also increase substantially due to changes in the housing market.
