Homeowners 'should prepare' for rate rises

Published: April 03, 2008

Homeowners are being told they should prepare for "significant" rate shocks if they have been on fixed-rate deals for the past few years.

Ongoing credit problems in the lending market mean that almost three-quarters of homeowners (1.4 million) will have to adjust to a sharp hike in monthly mortgage repayments, according to finance website Fool.co.uk.

As well as borrowers on fixed-rate mortgages, homeowners on discounted, tracker and capped-rate mortgage deals could face severe increases.

David Kuo, head of personal finance at Fool.co.uk, said that many households will feel the "full force" of the credit crisis when their special deals expire.

"A significant number of homeowners will find that the myriad of choices that were once available has shrunk to no choice, as lenders limit their best deals to their preferred clients," he added.

The Council of Mortgage Lenders is urging mortgage-holders to plan ahead for higher monthly payments.

"Anyone who thinks they might have a problem in paying their mortgage should talk to their lender as soon as possible," a spokesperson advised.