Interest rise = home loans disaster
As the prospect of a further rise in interest rates looms on the horizon, many thousands of UK homeowners could be forced into remortgaging their homes just to make ends meet.
A detailed report, conducted by one of the UK’s leading price comparison sites suggests that if rates were to rise at an expected increment of ¼ of a percent, potentially 2.5 million homeowners could be at risk.
Of those surveyed, around 15% of respondents confirmed that if the rate increase was to reflect a rise in monthly repayments equating to £55 or more they would be forced to refinance their home loans. A further 45% said a repayment increase of £100 would put them in the same position.
Approximately 2500 people participated in the survey, of which ¼ said that they were at their financial limits as a result of the last rise. A further increase would almost certainly make repayments unmanageable, forcing many people to remortgage or even sell their homes.
Alarmingly, only 10% of respondents could absorb a further rise in interest rates, and over 50% would have no other option than to change providers if rates reflected a repayment increase of £140 per month.
However, an increase of ¼ of a percent is only speculative. It is entirely possible that the rise could be as much as ½ of a percent, which would obviously be even more damaging to homeowners.
