Homeowners warned over high debts
Homeowners may find their finances stretched this year
Many homeowners will face a tough time in 2007 dealing with high levels of debt, a leading charity has warned.
The Consumer Credit Counselling Service (CCCS) said that higher inflation and interest rates will leave homeowners with less cash to pay their debts.
The charity said repayments on a £150,000 mortgage will already have risen by £500 a year as a result of three rate rises since last August.
On Thursday, the Bank of England left UK interest rates on hold at 5.25%.
It is no longer clear that getting a foot on the mortgage ladder is a sensible step. The rungs are wobbling
Malcolm Hurlston, CCCS chairman
However, many analysts predict that the Bank will raise rates soon.
Homeowners squeezed
The CCCS said it was seeing more homeowners with debt problems.
Higher interest rates are putting the squeeze on homeowners and this is being made worse by changes in the mortgage market.
The charity said that the high fees imposed by mortgage lenders made it increasingly difficult for homeowners to fix their mortgage rate - a move which can help people to budget more effectively.
In addition, the charity said that many new homebuyers had borrowed huge sums to get onto the property ladder and could find it hard to make ends meet in 2007.
"As the burdens on household finances mount, our research shows that homeowners in particular should take care," said CCCS chairman Malcolm Hurlston.
"It is no longer clear that getting a foot on the mortgage ladder is a sensible step. The rungs are wobbling," he added.
Overall, the CCCS has seen a boom in demand for its services in the past year, with a 65% increase in clients.
SOURCE: BBC News
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