Mortgage dilemma explored by broker

10/12/2009

The reductions to APRs on fixed rate mortgage deals made by several providers this week will help some borrowers find solutions to money problems, an expert has suggested.

Drew Wotherspoon at mortgage broker John Charcol said that the cuts were a "welcome Christmas present" for people who are currently on their mortgage lender's Standard Variable Rate (SVR) and now want to fix.

SVRs have fallen over recent months, due to the Bank of England's decision to cut interest rates to a record low of 0.5 per cent.

Increased competition among mortgage providers have also led to new low-APR deals coming on to the market.

However, the rates are likely to increase in line with the Bank rate - and it is currently unclear when this process will begin.

Those left on their lender's SVR and unable to find a suitable fixed deal when interest rates start to climb will face damage to their personal finances, increasing their risk of falling behind on their repayments and even of repossession.

Mr Wotherspoon said: "Rates are undoubtedly going to have to increase at some point in the future, so picking the right length of term for a new mortgage is as important as getting the best rate you can.

"Coming out of a fixed rate at the wrong time could be costly."

The Bank of England announced its decision today (December 10th) to hold rates at 0.5 per cent for another month.

Tags; Housing Debt and Bills, Young Family Finances,

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