Rate rises hit fixed-rate borrowers
Posted on 18 December 2007 by
Borrowers with a fixed-rate mortgage have been most affected by interest rate rises over the past year, research by the Bank of England has shown.
A survey commissioned by the Bank for its final quarterly bulletin of 2007, asked 2,000 borrowers about their mortgages, and how they had coped with any increases in their repayments resulting from higher interest rates.
The Bank says that the monthly repayments for borrowers with a variable rate mortgage increased by £45 in the year to September 2007. However, only 6% polled had experienced problems meeting payments.
By contrast, those with a fixed-rate mortgage that had expired during the year to September said that they now paid on average £59 more each month. Some 22% reported problems making payments.
The findings come after repeated concerns during 2007 that higher interest rates would cause financial hardship for those coming off a fixed-rate loan.
However, the Bank explains that although a similar proportion of borrowers' income is now spent on repayments as when the housing market crashed in the early 1990s, the recent interest rate rises have been far more restrained than those that sparked the slump.
Interest rates doubled from 7.5% in May 1988 to 15% in September 1990, and remained at more than 10% throughout 1991.
Post a Comment
Please keep your comments relevant. Charcol reserves the right to edit or delete comments.