Arrange a new mortgage now or face future debt, says expert

It is ‘obvious’ that low mortgage rate offers are going to be withdrawn as a result of recent turmoil in global financial markets, an industry insider has said.

David Kuo, head of personal finance at fool.co.uk, has claimed that homeowners should make mortgage arrangements now in order to avoid higher debt in the future.

The fact that the London Interbank Offered Rate – the level at which banks lend to each other – has risen to over six per cent could mean that costs are passed on to borrowers.

“We therefore urge anyone whose fixed-rate mortgage deal is about to come to an end to apply for a new one without delay,” Mr Kuo remarked.

A 0.25 per cent rise in variable rates can cost an extra £5,000 on a £100,000 homeowner loan over a period of 25 years, he added.

Recent events in the financial markets were described as ‘momentous’ by the Council of Mortgage Lenders.

By Jamie Price