10,000 may lose homes if mortgages rise £20 a month
Filed under: Debt
So just how have things got so tight, and should you be worried?
Mortgage Advice & Info
Rising costsThe rising cost of almost everything has meant more and more households struggling to make ends meet. As uSwitch said yesterday, the cost of energy alone is rising at five times the rate of wage inflation, and not everyone has the spare cash to pay for it. According to Shelter, 22% of people have spent less on gas and electricity to help make ends meet in the last year, and 34% have spent less on food.
Campbell Robb, Chief Executive of Shelter, said: "These staggering findings show just how many millions of people are cutting back on essentials as the continued squeeze on incomes starts to really bite. It demonstrates the tough choices families are now having to make, between heating their home, putting a decent meal on the table or paying for the roof over their head. Every two minutes someone in Britain is at risk of losing their home."
Mortgage ratesThe bright spot in the gloom has been that mortgage rates have been kept historically low by the Bank of England interest rate remaining at 0.5% for over three years. It means that whereas the price of everything else has been going through the roof, the cost of the mortgage has been kept low.
The problem is that increasingly the mortgage market is decoupling from the Bank of England rate, because of a severe lack of funding in the market. The Eurozone crisis means that funding has all-but dried up and that banks have been putting up their standard variable rates over the past few weeks in order to avoid attracting too much new business.
Sir Mervyn King (pictured) warned yesterday that the Bank of England was expecting this trend to continue, as the Eurozone crisis deepens.
Delroy Corinaldi, director of external affairs at CCCS, said that more than six million households are financially vulnerable, and that these increases could have catastrophic effects The charity estimated that even a very small increase could have 100,000 people fighting to keep their homes.