Debt help: High home loan rates 'a risk'

09/02/2010

Mortgage lending may be slashed and home loan rates could rise dramatically, Britain's banks have warned.

The warning comes amid worries that forcing the banks to pay back the government loans of £300 billion too soon could pass costs down to consumers.

A spate of rising home loan rates and a shortage of mortgages could follow, resulting in many people being forced to tighten their finances and consider debt management.

A recent meeting between the Council of Mortgage Lenders (CML) and the Treasury revealed that no agreement on repayment times was likely before the general election, the Financial Times reported.

This news leaves consumers unsure of the possible knock-on effects which could result from the banks' lack of funding.

According to the paper, Rob Thomas from the CML said that lenders are not suggesting that the government pour more top-ups in to the system; but rather that they help to wean lenders off of government finance without too much "shock therapy".

Posted by Jim Mead

Tags; Debt Management and Banking,

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