Mortgage Payment Concerns

A Financial Services Authority survey has revealed that nearly one in five borrowers are concerned about meeting mortgage payments for the coming year.

One quarter of those questioned admitted that they had no contingency plans in place to ensure the payments were met and that they were currently living on the absolute limit of their income.

Chris Pond of the FSA said: “Economic conditions are getting tougher, putting pressure on family finances,"

The situation has arisen due to the prospect of rising interest rates, which will hit those hard on variable-rate mortgages, taken out at a time when 125 per cent loan mortgages were common and interest rates were at an all time low.

Now, the FSA has warned that 1.4 million short-term fixed rate mortgages are going to end in 2008, which makes a painful jump in rates likely as banks pull out of the 90 per cent and above loan market. This would damage house prices and hit those who were depending on rising house prices to fund their payments.

The FSA has invested £2 million in a campaign that it hopes will educate people into making informed decisions about mortgage loans and what options those in increasing debt can take. It will form part of the FSA’s long term commitment to providing the UK’s first monetary guidance service.

Chris Pond continued: “"As the UK's financial watchdog we can help. Our new checklist sets out simple steps that homeowners can take to manage their money and mortgage in difficult times."

The biggest consequence of falling into financial trouble has been that people find it hard to find the time to tackle it. Often, companies that offer financial advice have a commercial agenda to earn money by consolidating your loans with them. An independent advice line such as the FSA’s should be a valuable tool in stemming the tide of repossessions.

Britain is still in a good position with Mortgage defaults and home repossessions at an all time low. However the crash of the 1980’s showed little impact until the early 90’s with 1992, as well as being the peak of the last recession, was also the most recent peak of the figures. The last quarter of 2007 saw these figures jump significantly for the first time since that period, rising 21 per cent in six months.

This places repossessions at their highest numbers since 1999 and if the FSA can give people the advice to pay off their debts, then a return to confidence in the housing market remains possible.

By: Tom Hughes

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Tom is an author of several articles pertaining to Mortgages, Insurance, Debts, Credit, Loans, Life Insurance, Bike Insurance, Van Insurance, Health Insurance, Remortgaging, Refinancing and other Business and Finance related articles.