Homeowners set for mortgage "shock"

20/11/2008

Homeowners are likely to receive a "big shock" following the withdrawal of tracker mortgages from the market, one expert has claimed.

Recent research by Moneysupermarket.com found that 23 tracker mortgages have been withdrawn from the market following the interest rate cut earlier this month.

This is likely to be a blow for those mortgage borrowers that were hoping for some financial respite from their debt following the cut.

According to Al Elliot, advisor at the Homeowners Advice Centre, the move is likely to have come about due to the significant difference between the rate at which banks lend to each other and the base rate.

He said: "Rates are currently very expensive - which is a clue that lenders don’t expect Libor to go down dramatically anytime soon.

"This seems the only option available to borrowers who are seeking new finance or about to exit an existing loan."

The comments follow the Council of Mortgage Lenders' most recent figures, which showed that an estimated 45,000 properties will be replaced in 2008.

Tags; Housing Debt and Bills,

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