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Interest rate disappointment for borrowers
(09-11-07) - In a blow to homeowners, the Bank of England yesterday voted to keep the base rate at 5.75 per cent.
The unexpected decision has hit home owners and borrowers who have been struggling to cope with the Credit Crunch caused by turmoil in the money markets over recent months.
It had been expected that the Bank would lower rates to ease the pressure on homeowners who have been saving less than half that of their mortgage-free counterparts since the stock market slump in the summer - the effects of which are still being felt.
Around 300,000 fixed-rate mortgages are set to end in December, leaving hundreds of thousands of already struggling homeowners with suddenly much higher mortgage repayments.
Chris Eagle, CreditChoices.co.uk commercial manager, said: “Anyone who fixed their mortgage at 4.5 per cent two years ago could see their interest jump considerably. For example Alliance & Leicester’s (www.Alliance-Leicester.co.uk) standard variable rate is currently 7.89 per cent.
“Homeowners are really feeling the pinch at the moment, but in the current credit climate people need to do all they can to ensure they don’t default on a single mortgage repayment, credit card statement or mobile phone bill. Lenders are increasingly reluctant to lend to “risky” borrowers and even the slightest blemish on a credit report could find people refused for mortgage renewals and other forms of credit.”
The Bank of England will next meet on 6 December to discuss the next possible rate change.
