Debt warning for new homeowners

Yorkshire Bank claims that rather than putting people off buying a home, the interest rate has merely meant that people with a loan or mortgage linked to the rate are paying more each month.

“Normally you would expect that with higher interest rates, buyers’ budgets would be tighter. This in turn might result in more buyers thinking to offer under the asking price,” Mr Lumby suggested.

“However, sellers are realising that with house prices continuing to grow, they are in the driving seat and can hold out for the asking price at least. As a result buyers are having
to refine their tactics accordingly.”

However, one reason for the failure of the rate increase to slow buying activity could be that most commentators are expecting a further rise in the interest rates in November.

In which case, borrowing costs will increase by the end of the year and many consumers may wish to take out a debt management plan to counteract the negative effects this will bring.