In October mortgages became the most expensive to repay since 1991…

In October mortgages became the most expensive to repay since 1991 due to higher rates of interest and rising house prices, the Council of Mortgage Lenders declared.

The CML said that interest repayments took up 20.6 per cent of a first-time buyers’ monthly income, up from 20.4 per cent the previous month and the highest since 1991.

Fears grow that this could lead to an increased number of repossessions as many fixed rate deals come to a close and borrowers are forced on to more expensive rates.

Gary Murphy, from auctioneers Allsop, says the number of repossessions has risen from 25% to 50% during the past year among the properties they auctioned.

CML’s Michael Coogan says: “Lenders have already responded to the credit squeeze by tightening lending criteria and increasing some loan costs.”

Chiltern’s Joanne Gill says: “People struggling with their mortgages should contact their lender immediately as it might be possible in some cases to extend their terms.

“On top of that, they should also ensure that all unsecured lending, like loans and credit cards, are put on a more affordable level. Impartial debt solutions companies like Chiltern can assist with this.”