Mortgages repayments prove a struggle for one million families

Posted 2007-12-18

A survey published by the Bank of England shows that nearly one million families are struggling to keep up with mortgages repayments with 1.8million people saying they have problems “at least occasionally”.  Figures show that rising interest rates have increased homeowners’ yearly mortgage payments by a total of £3.6 billion in the last year.

The poll in the Bank’s Quarterly Bulletin took place in September when the global financial crisis was in its early stages. Since then the situation has deteriorated and is expected to deteriorate significantly as the global credit crunch prompts banks to tighten their lending criteria.

Many households are cutting spending and borrowing as interest rates remain high.  Half of families who face increasing mortgages repayments plan to cut spending, while 10% have taken on more debt or extended their mortgages. On top of this, 10% of people have had to take on a second job or work overtime to make mortgage repayments.

The survey showed that those renting have more trouble repaying their debts compared to homeowners.  Around 28% of renters had trouble with debt repayments “at least occasionally”.

Chief economic adviser of The Confederation of British Industry said “while the slowdown may appear dramatic set against this year’s strong growth, the fundamentals of our economy remain sound and talk of a full blown recession is exaggerated”.

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