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Mortgages -
Repossessions to increase in 2008 - 20/12/2007
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Mortgage holders will feel the heat of the credit crunch over the year to come, the Repossessions Advice Centre said yesterday.
Tough financial conditions will be exacerbated by some homeowners coming off fixed rate mortgages and facing monthly repayments rising by up to 65 per cent in 2008.
This was caused by the Bank of England raising interest rates on five occasions over the past 18 months - although it did announce a 0.25 per cent cut last week.
The credit crunch, which began this summer, has also made lenders wary of exposing themselves to risk much more picky about who they lend to.
Director of the Centre, Paul Fletcher, claimed that a combination of the rate rises and the credit crunch will put the squeeze on homeowners so much that there will be a "large increase" in repossessions.
"A lot of fixed rates have been taken out because of interest rates going up, obviously people have been trying to stabilise themselves. They're coming out of those [fixed rates] and…they're struggling to remortgage, because the lenders have just stripped out all the criteria of what they would accept," he said.
"A lot of these people just aren't going to be able to get a new mortgage product, even with their existing lender."
Statistics from the Council of Mortgage Lenders show that repossession rates in the UK for the first half of 2007 - before the credit crunch began - were low, standing at just 0.14 per cent of total loans.
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