Despite a drop in wholesale funding costs throughout August, the price of fixed-rate mortgages has risen to its highest level in eleven months – causing debt management worries for homeowners.
A report by the Bank of England said that average five-year fixed-rate mortgage costs had increased to 5.72 per cent between July and August – up from 5.68 per cent.
This is the highest level since October last year when the BOE’s base rate was 4.5 per cent. Currently the base rate is 0.5 per cent.
For homeowners needing the security of fixed payments, these rates aren’t helping with their household debt management, as the higher costs can cause financial strain.
Debt advice organisations have expressed concern for vulnerable households.
Ivan Cooper, Chairman at leading debt management company Chiltern said: “Lenders are using the higher rates to put people off their mortgages to lower their risk.
“But for homeowners trying to switch mortgages to a more competitive rate and reduce their outgoings, it’s almost impossible – unless you have a considerable amount of equity in your home, a large amount of cash and a perfect credit history.
“By being unable to move deals, many homeowners are now finding that they are struggling to maintain their unsecured loans, store card and credit card debts, which places even further strain on households as higher charges and interest rates are levied.
“Seeking impartial debt advice from a reputable debt help organisation could prove beneficial, as they can prevent debt problems from getting any worse.”
Reputable debt advice organisations, such as The Debt People, Hamilton Locke and Chiltern, offer useful debt help for people struggling with their unsecured balances.
They can show you many ways to get out of debt and how to alleviate any debt problems, by offering useful debt advice to suit your circumstances.
For many people, simple budgeting and debt advice is all that is needed to bring finances in-line, although in other cases a professional debt management solution may be required.
The specialists at the debt help organisations mentioned above, will be able to go through your situation and recommend a Debt Management Plan (DMP), Individual Voluntary Arrangement (IVA) or other solution if it is suitable for you.
Economists have warned that mortgage rates could rise further throughout the rest of the year, as lenders look to boost their profit margins and remain reluctant to take on new business.
For immediate debt advice, or for more information on a number of debt help programmes, please call the number at the top of this page.