As many as one in four mortgages in the UK could become too expensive for borrowers when an expected increase in interest rates begins later this year.
Around two million homeowners could be affected, most of whom took out mortgages which would now be seen as risky, but which were commonly available before the financial crisis struck.
As the UK economy improves, economists expect the Bank of England to raise interest rates, which have been languishing at a record low level of 0.5 percent. Although the increases will be introduced gradually, they could still leave some borrowers in a vulnerable position. This applies particularly to those who took out high loan-to-income, high loan-to-value, or self-certified mortgages.
Research carried out by the Resolution Foundation found that financial problems are already being experienced by one in five borrowers even before any interest rate increase. UK household debt, which is largely made up of mortgage debt, is expected to rise from its current £1.5 trillion to reach £2.2 trillion by 2018. The Foundation has suggested that mortgage lenders should offer financial advice to their most vulnerable customers now instead of waiting until they are in arrears.
As it becomes more important than ever to make sure they obtain the right mortgage, more people are asking professional advisers to help them find the most suitable deal. It is not surprising that many in the UK are taking CeMAP courses, from Birmingham to Basingstoke, in order to meet the increasing demand for trained mortgage advisers.
