Debt levels could rise for homeowners
The Consumer Credit Counseling Service (CCCS) is warning homeowners that they could have a harder time paying off debt this year. Even though the Bank of England left interest rates at 5.25 percent Thursday, three rate hikes since August meant that payments on a £150,000 mortgage are already £500 higher per year. With many analysts predicting further rate hikes soon, that figure could soon be even higher.
The chairman of the CCCS has said that for many, taking out a mortgage might no longer be a “sensible” thing to do. Higher interest rates mean higher payments. In addition, changes in the mortgage market are making it more difficult to get a mortgage payment that does not rise each time interest rates go up. Often the fees for a fixed-rate mortgage are very high, putting that option out of the reach of many people.
Already, according to the CCCS, it has seen the number of individuals using its services go up by 65 percent in the past year.