Tuesday 11th of August 2009
A rise in the base rate of interest of a few percentage points could add hundreds to households’ debt management difficulties.
Financial industry analyst Moneyfacts estimates that £300 would be added to the typical tracker mortgage for a £150,000 property if the base rate were to return to four per cent.
The base rate last exceeded this threshold ten months ago, in October 2008, before being cut from 4.5 per cent to a flat rate of three per cent by the Bank of England’s Monetary Policy Committee in November.
After five months unchanged, however, any rise in the base rate could carry debt management implications for borrowers.
While a fixed-rate mortgage could help to combat these problems by locking a household in to low-interest repayments, the number of products available has declined for anyone with less than a 15 per cent deposit since August 2007.
There are now 83 per cent fewer fixed-rate deals at a loan-to-value ratio of 90 per cent.
By Ashley Littley
- Debt consolidation loans falling, figures show
- Britons 'changing attitudes' towards debt management
- Homeowners 'more concerned with debt management'
- Low interest rate 'contributing to debt management efforts'
- Debt management growing in importance, survey finds
- Monetary gifts 'being used to service debts'
