Homeowners Unrealistic With Rates
Many homeowners are failing to plan ahead for when the Bank of England raises the base rate which has been held at 0.5 percent for a record 21 months.
According to figures from unbiased, mortgage holders are prepared to pay a rate of 3.3 percent on a fixed deal, which is considerably lower than the 5.1 percent best buy deal currently on the market.
The research suggests homeowners have become rate-spoilt and are unrealistic with how much they should expect to pay when the base rate eventually rises. In January 2009 the average rate people were prepared to pay was 4.0 percent.
“Their ideas of what is a reasonable fixed rate mortgage have become distorted in the low-interest rate environment, and they need to ensure that their mortgage expectations are realistic,” said Karen Barrett, chief executive of unbiased.
“Homeowners need to be alert to ensure they don’t miss out on getting the best deals before it’s too late.”
Thirty one percent of all homeowners are on their lender’s standard variable rate mortgage deal, and have no plans to change this before fixed rate deals rise along with the rise in the base rate.
Budgeting Tips to Cope with Higher Mortgage Bills
If you have been taking advantage of the low base rate and are worried how your income will be able to withstand a rise in your monthly bills, take a look at these budgeting tips.
Start making a budget straight away so you can tuck some savings aside for when you might later meet financial difficulty with the extra strain of higher rates.
If you budget all your monthly outgoings and then load this money onto a pay as you go card this will help you stick to it, and not spend more than you intend to.