Cost of home loan hits seven-year high
The cost of mortgages across the UK has soared to a seven-year high with mortgage bills more than 20% higher than two years ago as the credit crunch takes its toll.
Figures from the Bank of England show that homeowners are paying an average of £135 more per month for their home loan than a year ago, prompting fears of a rise in home repossessions as people struggle to pay debts.
Prime Minister Gordon Brown said yesterday that 2008 would be a “decisive year for the economy”.
The Bank of England is under pressure to announce a further cut in interest rates for a second month running this week in a bid to reduce the cost of borrowing.
But mortgage lenders have indicated that future base rate reductions will not necessarily be automatically passed on to borrowers.
Official data shows average mortgage rates climbed from 5.94% to 6.02% between September and November last year despite the Bank’s base rate remaining the same.
David Owen, an economist at Dresdner Kleinwort, said: “This is yet more proof that the effects of the credit crunch are starting to filter through to households.
“It is particularly striking that the average mortgage rate rose to this level without a similar increase in the base rate.
“It is also fair to assume there will have been an increased number of households unable to secure credit because banks have become much more unwilling to lend.”
May 28th, 2008 at 7:33 pm
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