Value Of Mortgage Loans On The Increase
According to data released by the Bank of England, there has been a sharp rise in the number of borrowers taking out loans of around one hundred and fifty thousand pounds or more in order to fund a mortgage. Figures indicate that a tenth of borrowers have had to take out a mortgage of one hundred and fifty thousand pounds or more, and this is due to the increasing value of properties in the UK.
In addition to this figures have also indicated that a large number of homeowners are now struggling to keep up with repayments on their mortgages, and this figures has grown year on year since 2002. Rising interest rates and larger mortgage loans have resulted in many people being lumbered with mortgages that are crippling them financially, and around nine hundred thousand homeowners are currently thought to be struggling to keep up with their mortgage repayments.
Between January and June the percentage of repossessions in the UK increased hugely by over seventy 5%, which is another indication of the struggle that many are facing to keep up with repayments on their large mortgage loans. Some experts are concerned that, although the blame lies in part with the borrower for taking on more than they can comfortably afford, part of the blame also lies with many lenders for offering more than the applicant can feasibly take on.
One expert from a mortgage management company stated: "If people borrow the maximum they can get away with, it is quite possible they will be overstretching themselves. It may then only take one or two rate rises to put an impossible squeeze on their finances."
Borrowers are urged to carefully assess their finances before taking out a large mortgage loan to ensure that they can comfortably afford the repayments, and not to take on more than is necessary to avoid overstretching their budgets.
14th December 2006