Fixed Rate Mortgage Offers And The Sting In The Tail
As the property market continues to prosper it seems as though a number of elements will soon be coming together to derail this run away train. While interest rate rises are starting to have an impact, and a rising rate of inflation has increased living expenses, there may just be a sting in the tail to tip many home owners over the edge!
As the housing market started to pick up a couple of years ago there were many cut rate or fixed rate mortgages on offer, and they proved to be very very popular. Over the last 24 months these offers have been discreetly withdrawn as interest rates continue to climb higher. The problem is that those who took out mortgages with rates fixed for 2 and 3 years in 2005, will soon be seeing their payments rise by up to a third, based on current interest rates.
Official figures suggest that some 1 million mortgage holders, who borrowed a staggering £200 billion in fixed rate mortgages in 2005, will see their payments rise towards the end of 2007 and into 2008. Quite how these home owners will find the task of reverting to new budgeting arrangements at a time when the cost of living has risen substantially remains to be seen. This could just be the shock which forces many to consider selling their homes and banking any profit - thereby taking some of the buying pressure out of the system.
If this possible drip feed of potential house sales where to increase and become a substantial flow, it may mark the top of the housing market, at least in the short term.
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