Mortgage repayments at highest in fifteen years
Over the past year interest rates in the UK have risen a total of four times, each by 0.25 percent.
The Bank of England raised interest rates in August and November of last year, and in January and May of this year, and many analysts predict that there will be a further rise in the summer.
In the space of a year the interest rate has gone from 4.5 percent to 5.5 percent, and some think that it will need to rise by a significant amount yet in order to bring inflation under control.
These interest rate rises have been bad news for homeowners on variable rate mortgages, as well as for buyers hoping to get onto the property ladder, as they have resulted in increased repayments and higher interest rates on fixed rate mortgage deals. And according to recent figures the interest rate rises have resulted in the highest mortgage repayments in the space of fifteen years in the UK.
According to figures from the Council of Mortgage Lenders average repayments on mortgages in the UK have hit a fifteen year high. The Council of Mortgage Lenders reported that 18.7 percent of the income of first time buyers was going on mortgage interest, which was up from the figure of 18.3 percent in March of this year, and was the highest on record since 1992.
Although the Bank of England is not raising interest rates again this month, the Council of Mortgage Lenders states that the recent interest rate rises have seriously affected affordability.
One official from the Council of Mortgage Lenders stated: "With the impact of May's interest rate rise still to be felt, many borrowers face higher costs in the coming months. With two million fixed-rate loans coming to an end over the next year and a half, many borrowers should anticipate that their mortgage costs are likely to rise and should be planning ahead."
1st July 2007
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