Rising Repayments Will Lead To Growing Distress For Home Buyers - Cable

5.32.16pm BST (GMT +0100) Mon 4th Jun 2007

Commenting on today's research by Mortgage Advice Bureau, that found that borrowers who are re-mortgaging this year could expect to see a rise of up to 25% in their repayments, Liberal Democrat Shadow Chancellor, Vince Cable MP said: "As many as one million existing mortgage payers could be hit by this nasty financial shock.

"The assumption made by most commentators is that borrowers are gradually adjusting to rising interest rates. But some will face massive increases as a result switching their mortgages.

"The shock to heavily indebted borrowers is much more serious than the Government or the Bank of England appear to believe.

"We can expect to see growing evidence of distress in the form of arrears and repossessions, unless the banks are willing to take a more long-sighted and responsible approach to heavily indebted borrowers.

"The recent weakening of the housing market in many parts of Britain may well reflect the difficulties experienced by many mortgage borrowers. The situation could yet get a lot worse."

ENDS

Notes to Editors

Analysis from mortgage broker Mortgage Advice Bureau estimated that between April and June 2005 alone, 178,000 people took out a two-year fixed rate deal.

At that time the best fixed-rate mortgages offered customers a rate of around 4.49%, far below the current average SVR of 7.40%,

It is also lower that the best deals on the market today, with the leading two-year fixed now carrying a 4.99% rate.