With speculation rife about a base rate rise this year, consumers with mortgages may be thinking hard about switching from a variable or tracker mortg…
With speculation rife about a base rate rise this year, consumers with mortgages may be thinking hard about switching from a variable or tracker mortgage to a fixed-rate deal, not least if they are fearing the prospect of losing their home by not maintaining repayments.
One feature of the recent recession notably less severe than its predecessor is the number of repossessions. There may be good reasons for this, of course. Unemployment has not hit the three million mark as it did in the early 1990s and interest rates are lower – indeed, the lowest since the Bank of England was formed in 1694.
But with three members of the Bank of England’s Monetary Policy Committee (MPC) supporting a rate increase last month, it may be wise to consider options.
Mortgage specialist at Nationwide Martin Dyson commented: “If people think the base rate is going to rise very soon then clearly fixed-rate mortgages might be a good option because they can provide certainty, stability and help with budgeting.”
For those who have debt problems including mortgages this may, therefore be a wise move, as it helps future planning by removing one source of financial uncertainty.
Mr Dyson went on to comment that the best way for consumers fearing repossession to respond is to speak to their lender about the situation.
Those who are struggling with mortgage debt will not be alone, with the average household in the UK owing £57,635 including their homebuyer loans.
This being the case, seeking debt management help, or even an individual voluntary arrangement (IVA) is something those who might find a base rate rise this year stretches their finances too far may consider.
By Amy White