Mortgage Rates Hit 9 Year High
Mortgage rates have reached a 9 year high, as a result of the latest turmoil in the financial markets.The standard variable rate rose by almost a quarter percent last month to 7.69% - the highest level since 1998 when interest rates we 1% higher than now. This is a direct result of the banks' credit crunch, where banks have stopped lending to each other leading to a rise in their own borrowing costs.
Howard Archer of Global Insight comented: "A substantial number of homeowners will see their mortgage bills rise markedly during the latter months of the year as the cheap fixed-rates that they took out two years ago expire." He also predicted that the recent problems could push house price growth down "sharply".
The Abbey will today become the first mortgage lender to raise its mortgage rate on a range of tracker mortgages. Standard Life is expected to follow suit tomorrow.
As well as raising their costs, lenders are showing less patience towards borrowers who fail to keep up with their regular payments, experts have found.
The Council of Mortgage Lenders (CML) said recently that there had been a 30 per cent rise in repossessions in the past year.
With the average Standard Variable Rate having increased from 6.4 per cent in the past year alone, a family with a £100,000 mortgage will now be paying an average of £108 more in interest each month, or £1,290 a year.
David Owen, the chief European economist at Dresdner Kleinwort, said: "Lenders are giving far less of a grace period to borrowers than ever before. If you are considered a more risky proposition, you are more likely than previously to lose the house."
If you're finding it difficult to cope with mortgage rates increases, give Quick Move Now a call on 0800 068 3366 - we could be able to help you.
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