Homeowners have been given warnings to beware of interest rates rising in 2015.  Preparing ahead of time and securing a remortgage with a low interest rate fixed for a long term could be the best thing for most homeowners.  Keeping borrowing low has enabled many families to remain in their homes.  Should interest rates increase by only a few percentages, then it has been determined that over one-third of mortgage holders would find it financially difficult to meet a higher repayment amount.

 A report from the Council of Mortgage Lenders (CML) revealed that there were fewer homes repossessed in the UK in the third quarter of the year.  There were 5,000 repossessed in the third quarter this year and 7,200 in the same quarter last year.  There were 5,400 in the second quarter this year. 

The CML also revealed there were fewer mortgage holders falling behind on their mortgage repayments at the end of September.  A little over 125,000 mortgages were in arrears of more than 2.5% of the outstanding mortgage debt during the third quarter of the year.  In the second quarter there were 131,400 and in the third quarter of 2013 there were 149,400.

There are currently more than 11.1 mortgages in the UK at a value of more than £1.2 trillion.  It is important that homeowners prepare now for upcoming higher interest rates.  If their current mortgage has ended and have been moved to their lender’s standard variable rate (SVR) then they would be at a high risk for higher interest rates with little notice.  SVR interest paying mortgage holders and those due to have their mortgage deal end could benefit by shopping around for a new deal while interest rates are so affordable.  Even those still in a mortgage deal could check on the penalty fees for ending the deal early to see if remortgage deals available could save them money.

The important thing is to recognize that interest rates are due to change as the economy grows and requires a more normal level for the standard base interest rate set by the Bank of England.  Preparing now will make the difference for how the higher rates will impact a mortgage holder’s budget.