Officials from the Financial Services Authority have stated that millions of homeowners could face rising mortgage costs as a result of their cheap fixed rate mortgage terms coming to an end. Around one and a half million homeowners are expected to be affected over the coming months, and as a result of this a number of agencies are working together in order to try and put together some advice for those that are going to be affected by higher repayments, which could lead to higher levels of defaults and repossessions.
The Money Advice Trust Charity is working with officials from the Council of Mortgage Lenders in order to put together some advice on these loans. One official from the charity said: “The idea behind the initiative is to give free early advice to these borrowers coming off their fixed-rate deals and highlight key sources of independent and free confidential advice, such as adviceUK members, Citizens Advice Bureaux, Business Debtline, National Debtline and the Consumer Credit Counselling Service.”
She also went on to state: “We have already seen a 16% increase between 2007 and 2008 in clients contacting National Debtline for advice regarding mortgage and secured loan arrears and we fear that people really are starting to struggle with their mortgage payments as credit becomes more expensive to service. Our experience suggests that if you do get into difficultly, seeking free independent advice as soon as possible is the best option to help you sort out your problems. There is always something that can be done and the earlier you seek advice the more options you will have.”
The CML said: “A large number of borrowers are likely to see their mortgage costs rise when their fixed-rate deals expire this year. We may be past the peak of the ‘payment shock’ this will produce, but market conditions remain uncertain and borrowing costs are continuing to rise. Borrowers need to plan ahead for higher monthly payments and look carefully at the options available to them. Anyone who thinks they might have a problem in paying their mortgage should talk to their lender as soon as possible. The earlier the borrower makes the lender aware of any potential payment problem, the wider the range of options for dealing with it.”