20 Per Cent Of Homeowners Fear Repayments
A recent report by the Financial Services Authority (FSA) said that 1 in 5 homeowners are worried about being able to make their mortgage repayments over the next 12 months. One quarter of those asked about how they would meet these costs said they had no plans.
The sample group was relatively small, around 573 mortgage holders, however the data was enough to offer concern to the financial watchdog. As a result, the FSA is planning to launch a £2m advertising campaign aimed at helping consumers make educated financial decisions as well as help them find the right mortgage for their needs.
The Bank of England has now dropped the base rate twice in the past 3 months. Despite this, nearly one and a half million short-term fixed-rate or discount mortgages will end this year raising repayments to potentially unaffordable levels. Rising energy and food prices are already affecting tight family budgets causing concern as to whether or not homeowners will be able to make their repayment obligations.
The FSA's Director of Financial Capability, Chris Pond, said, "Economic conditions are getting tougher, putting pressure on family finances. As the UK's financial watchdog we can help. Our new checklist sets out simple steps that homeowners can take to manage their money and mortgage in difficult times.
"And for those who are really struggling, don't panic. Talk to your lender or get free, confidential debt advice."
A checklist has been published by the FSA to help homeowners manage their mortgage if times become too difficult.
To begin with, here are a few recommendations:
- Check your budget: If you are on a fixed-rate deal now, think about how would cope if your repayments increased significantly
- Start planning now: Speak with your lender and compare mortgage products if you decide to remortgage
- Get help and advice: If you start falling behind in your payments, don't panic. Talk to your lender straight away and consider getting free, confidential advice from an independent debt advice agency.
If you realise your fixed-rate is ending soon, be prepared. Ask your lender what your new monthly repayment amount will be at the end of the fixed or discounted term. Decide if you can afford these higher payments and if not, be sure you already have a plan to make up for the additional costs.
Published on March 6, 2008
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