Despite having good credit, thousands of home mortgage holders may suddenly find themselves thrown into the subprime category as their loans switch over to variable rates. If home mortgage holders have not put aside extra money to handle higher payments right now, many homes may be going into foreclosure over the next few months. Without a significant drop in home mortgage rates, the housing market could be in for an even larger correction.
Moneysupermarket’s Louise Cuming says: “Many homeowners will be plunged into a borrowing underclass in July when their fixed rate deal comes to an end. Anyone whose fixed rate deal is coming to an end should start planning at least three months before the product is due to finish. You should approach your existing lender to find out what ‘retention’ product they will offer you. This will give you a useful benchmark to compare against other offers.”
CML director general Michael Coogan said: “The growing popularity of fixed-rate mortgages, despite the relatively high rates, suggests that many borrowers are prioritising certainty in their monthly payments. Lending levels continue to be lower than last year and any recovery is still some way away, with little sign of the special liquidity scheme increasing the flow of funds to the industry or lowering the cost of funds as hoped.”
Related reading: Home Mortgage
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