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UK First Time Buyers Stretched To Breaking Point

The recently announced rise in interest rates by the Bank of England couldn't have come at a worse time for the hundreds of thousands of Brits who are failing to make their mortgage repayments and who now risk losing their homes.

According to a survey of 2,000 mortgage borrowers by NOP for Citizens Advice, some 770,000 Brits have missed at least one or more repayments at some time during the last 12 months. At particular risk was first-time buyers, with many first-time buyers also having to struggle with making UK credit card, loan, student loan and car loan repayments at the same time. 13% of UK homeowners under the age of 24 admitted that they have missed at least one payment in the last 12 months.

Add to this is the fact that many first-time buyers admit to having got themselves in financial difficult as a result of having to borrow more than they could really afford, with some of the hybrid home mortgage loans now on offer in the UK, and having been particularly hard hit by the recent rise in the Bank of England’s interest rate.

The news for those six months in areas in making repayments on their home mortgage loans is not any better and home repossession rates in the UK for the last six months rose to 8,140, their highest since 2001.

David Harket, chief executive of Citizens Advice, who have had to deal with over 50,000 inquires about home mortgage loan arrears in the past 12 months, had particular criticism for those who lend to people with bade credit histories, the so-called sub-prime lenders, stating that “Promises of quick decisions, easy monthly payments and help for people with bad credit ratings or mortgage arrears look very attractive. Celebrity endorsements could also lull people into a false sense of security. But these can detract from the vital small print that loans my be secured against your home and that you could lose it if you miss payments.

Unfortunately with the increasing likelihood that UK interest rates are going to rise again some time during the winter to counter the growing threat of inflation, a number of senior economists in the UK are predicting that UK home mortgage loan repayment areas can only carrying on rising in the short term as those who are already stretched to breaking point simply won’t be able to make their repayments if and when interest rates do go up, so now is the time to be making sure you cut back on as many unwanted expenses as you can.

Richard Smith
15th September 2006

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