Mortgages are getting less affordable, agreeing to figures released by the Council of Mortgage Lenders, meaning that more people will struggle to keep up their repayments in the arrival months.
Interest payments now inventory for the largest proportion of mortgage holders' incomes than at any time over the last 15 years, with first time buyers struggling most. Of their net monthly October wage 20.6 per cent went on paying mortgage interest, a rise of 0.2 per cent in only a month. That is the highest it has been since 1991, the Cml revealed.
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Home-movers also spent more on their interest payments, with the Cml recording an median 17.6 per cent of net monthly wage used to declare home loan interest in October. That shows a wee increase on the old month's total of 17.5 per cent, and is now at the highest level since 1992.
But the Council of Mortgage Lenders welcomed the quarter per cent base rate cut in early December saying it would contribute some much needed relief to those holding Uk mortgages. Because someone else rate cut is widely incredible in the New Year many homebuyers who are on acceptable variable Rate (Svr) mortgages will benefit further.
Indeed, the hope of reducing interest rates are prompting more people to opt for Svr mortgages ahead of fixed rate products, with the latter accounting for 68 per cent of all loans in October, reduced from 72 per cent in September. Cml Director Michael Coogan said:
"For those customers whose fixed rate mortgage [http://www.moneynet.co.uk/mortgages/index.shtml] is arrival to an end in 2008, the possible impact of higher monthly payments will be reduced by the cut in the bank rate this month, and hopefully other rate reductions to come early next year."
Although lending volumes remained salutary in October, showing a nine per cent rise on September's figures to total £33.5billion, the Cml believes that the effects of the global prestige crunch are still to be felt, as most of those loans would have been popular ,favorite prior to its impact. To prove the point pipeline figures for mortgage approvals are already showing a slowdown and the organisation said it incredible that over the arrival months lending levels would be 'subdued'.
So, although the December interest rate cut has in case,granted some relief for borrowers, with hopefully more on the way in the New Year, homeowners are still struggling as they now have to devote more of their wage to paying mortgage interest.
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