Bleak current situation
Posted by hasnain on 21 January, 2008
The average cost of a mortgage has hit a seven-year high – and the banking industry is warning that 2008 will see a 50% rise in repossessions.
Over the past 12 months the average monthly mortgage repayment has risen by £135 – a 20% increase – according to the Bank’s latest Credit Conditions Survey.
First-time buyers are currently spending 20% of their monthly income on mortgage repayments – 10 years ago the figure was 14%.
How the sums add up:
The potential payment hikes are significant – for example, someone who took out a 4% fixed-rate £200,000 repayment mortgage in 2005 will be paying around £1,100 a month. But once the fixed-rate period ends and the rate reverts to the lender’s standard variable rate of 6% or more, the monthly repayment will rise to over £1,300 – an increase of £200. A standard variable rate of 6.5% would mean a monthly payment increase of £300.
