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Families across Britain have faced rises in food, energy and fuel bills and now thanks to the credit crunch rises in mortgage rates are the next on the list. The number of people due to come to the end of fixed term mortgage deals this year is predicted to be around 1.4 million, and they will be entering a very different mortgage market to the one in which they choose their initial deals.
People with bad credit are in an even more difficult situation as they may find that they are unable to source a mortgage from another provider. Banks and building societies have tightened their lending criteria making it harder for people with poor credit histories to be eligible for a loan. In this situation, when the cheap fixed deal ends individuals may be forced to pay the lenders more expensive standard variable rate of around 7.5%. This is a huge jump of up to 3% on the deals available in the market place during 2005 – 2006. In terms of hard cash this would be £200 more a month on a mortgage of £100,000. On top of all the other rises in household expenditure, it is predicted that people will struggle to cope.
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