In a bid to stem inflation the Bank of England raised interest rates to control spending by consumers. UK Homeowners with a typical £100,000 mortgage will have to pay £80 more on monthly repayments than they did last summer. Mortgage lenders who pass on the rate rises to their customers will add around £16 a month to the bill of a family with an average size home loan.
Home owners in London will be heavily hit with their house prices the highest in the country, London home owners with a £200,000 mortgage, are likely to see monthly repayments increase by around £33 as a result of today’s decision – taking the annual increase up to £160.
The move has sparked concerns for those who have overstretched to get on the property ladder. A recent study by YourPropertyClub who conducted a survey of 3,500 homeowners revealed more than a third are willing to go over budget to live in a particular area. This over spend translated into an average £9,524 or a 30 per cent overspend on their budgets. The survey also revealed that 17 per cent regret going over budget. Citizens Advice said the latest move on rates could spell “disaster” for families already struggling to keep financially afloat.
Peter Tutton, social policy officer at Citizens Advice, said the additional cost of a further rate rise would hit some homeowners hard.
“Current research we are doing shows there are more people going into local bureaux who are falling behind with mortgage payments and in some cases are threatened with repossession,” he said.
“We know some people are taking on mortgages that stretch them to the absolute limit.
“A rise in mortgage interest rates could spell disaster for people whose finances are balanced on the very edge of affordability.”
A recent report from HBOS Plc showed the average cost of a home in Britain rose 0.4 percent last month to 197,461 pounds ($399,000), compared with 0.3 percent in May, the U.K.’s biggest mortgage lender said in a statement on the Regulatory News Service.
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