Mon, 11 Aug 08
The uncertainty over the direction that UK interest rates will take has led to indecision over what kind of mortgage to go for
Abbey's remortgage index for July showed that a whopping 41% of homeowners are unsure about which mortgage would work best for them. This was an 11% increase from June's 30%.
Abbey said that this was directly linked to the difficulty many have had in trying to second guess how the Bank of England's monetary policy committee will handle the interest rates.
Director of Abbey Mortgages Phil Cliff said, 'The current uncertainties surrounding base rate decisions and the general uncertainties on the market at the moment are clearly feeding through into views on mortgages.'
Council of Mortgage Lenders (CML)
The CML's latest report shows that the number of mortgage arrears and possessions cases in the first half of 2008 have both increased from their low base as expected.
However, the vast majority of the UK's borrowers continue to pay their mortgages in full every month, and will continue to do so.
The CML is maintaining its forecast of 45,000 total repossessions and 170,000 mortgages in arrears of more than three months by the end of the year. These numbers remain extremely small when seen in the context of the 11.74 million mortgages in the UK.
There were 18,900 cases where lenders took possession of property in the first half of the year. This compares with 13,400 in the second half of 2007, and 12,800 in the first half of 2007.
The CML has been working with the government, consumer groups, the Financial Services Association (FSA) and the courts to ensure that as much as possible is done to help borrowers who may be facing financial problems, and to manage arrears effectively in business terms.
CML Director General Michael Coogan said, 'The number of people facing difficulty needs to be kept in perspective.
'The good news is that most people are coping well and continuing to pay their mortgages in full, despite the higher costs of food and fuel and the higher mortgage rates now prevailing in the market for those coming off cheaper original deals.
'But it is inevitable that more borrowers' coping strategies will come under pressure in current conditions than in the unusually benign years of the last decade.
'That's why lenders, government and the advice sector are working closely together to minimise the impact on borrowers.
'We will continue to work on behalf of the whole industry with the FSA and others to ensure fair practices are maintained. And we continue to press the government to play its part in creating an effective safety net for vulnerable borrowers facing a short term loss of income through better state support.
'No-one wants to see a household lose their home, and repossession typically leads to a loss for the lender as well.
'The focus of lenders' arrears management policies today is on seeking realistic alternatives that balance the interests of customer and lender.
'Anyone who thinks they may be heading towards financial problems should contact their lender to discuss their options - the earlier the better,' Mr. Coogan added.
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