Mortgage holders issued urgent warning as interest rates hiked: 'Sell now!'
For Sale signs outside houses in Fulham, London
PA
Mortgage holders have been issued with an urgent warning after the Bank of England hiked interest rates to five per cent.
Britons struggling to pay their mortgages have been told by lenders to sell their homes as soon as possible as property prices look set to fall.
Mortgage rates on fixed home loan deals have risen to as high as six per cent after the Bank of England increased its base rate for a thirteenth consecutive time in a bid to curb persistently-high inflation.
The challenge facing mortgage holders led Chancellor Jeremy Hunt to last week publish a charter to help homeowners.
Money stashed into a toy housePADuring a meeting with high street bank lenders in Downing Street, the Chancellor of the Exchequer agreed to implement a 12-month minimum before repossessing homes.
He also ensured struggling borrowers will be allowed to extend the term of their mortgages or move to an interest-only plan temporarily “no questions asked, no impact on your credit score”.
However, banking trade body UK Finance announced mortgage repossessions had hit their highest level since the pandemic in an update released earlier this month.
The situation facing millions of Britons has led some experts to suggest selling up before things get even worse.
Monopoly pieces stacked on moneyPAMark Bogard, chief executive of the Family Building Society, said: “By hanging on it will only get worse. Sometimes, you just have to stop.”
Charlotte Harrison, home financing boss at Skipton Building Society, added: “Everyone’s situation will be different.
“For a small minority of borrowers, sadly the best option may be a voluntary sale.”
A spokesman for the FCA also said its longstanding position was that repossession or a sale should be a last resort.
A view of houses in north LondonPAThey added: “However, where other support hasn’t resolved the situation, a borrower is in serious arrears, their balance is increasing and their share of ownership is being eroded, this can lead to poor financial outcomes.
“In these circumstances it may sometimes be in the borrower’s best interest to sell the house.”
Despite ever-increasing concerns about the property market, UK house prices unexpectedly grew between May and June.
Building society Nationwide said property prices rose by 0.1 per cent this month compared to May.
However, there had been a 3.5 per cent slump compared to June last year.