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Homeowners Should Prepare For Loan Rate Rises

For the past fifteen months, borrowers in the UK have been enjoying particularly low interest rates on their home owner loans, personal loans and other debts, due to the historically low level of the Bank of England base rate of interest.

Many borrowers have been taking advantage of their cheap loan repayments and using the low interest rates to make overpayments on their home owner loan, or repay their more expensive debts, such as unsecured loans and credit card debt. Others have used the monthly savings to put to one side to build themselves a cushion for future emergencies.

However, a large proportion of people with home owner loans and more expensive unsecured loans have used the monthly savings on their loan repayments to fund their lifestyle and luxury items, such as holidays, or a new car.

But one expert has now warned borrowers that they need to start making savings or overpayments now, if they are to avoid difficulties with their loan repayments in the very near future.

Ian Long, from St Trinity Asset Management has said that borrowers need to put the money they are saving to one side, to prepare them for possible imminent rate rises on their loans, or they could face the prospect of repossession in the next twelve months.

Mr Long said “There’s only one way for interest rates to go and that is up. The Council of Mortgage Lenders has projected there will be 53,000 repossessions this year, but I would say it will be closer to 40,000. When interest rates do eventually increase, we will see more repossessions in the market. People haven’t put money away for this and instead have been making the most of their extra disposable income.”

SOURCE: http://www.cheaploans.co.uk/