Homeowners face higher mortgage payments

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Homeowners face higher mortgage payments

Mon 16th May 2005

Homeowners are facing a considerable hike in the price of their mortgage payments this year, following the soon-to-expire low fixed-rates they took out in 2003.

Some 600,000 homeowners who took out the fixed-rate mortgages are likely to be affected by the fact that only three-quarters of the effect from the 1.25 per cent rise in interest rates since November 2003 has filtered through, Reuters reports.

"There are a number of people, a significant number of people coming off two-year fixed-rates," warned Michael Coogan, director-general of the Council of Mortgage Lenders.

However while he said that that would result in higher prices for many, it should not signify real "financial distress".

Consultancy firm Capital Economics has predicted the average mortgage payment expiring in the first half of this year will go up by 24 per cent, equivalent to £130 on a £510 a month mortgage payment.

Meanwhile the Bank of England governor, Mervyn King, has played down fears that the situation would have a broader impact on the economy.

"The numbers aren't large enough to make a difference for consumer spending as a whole," he predicted.

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