The credit crunch is definitely besetting Britain since the last recession in 1995. And the government is seeing more Britain’s going bankrupt or worse, having their homes repossessed.
Think about this: from January to March of 2005, the number of repossession orders that were reached 26,000, which Britain’s highest since 1995. The Department of Trade and Industry (DTI) has also noted a sharp increase in the number of personal bankruptcies in Britain. Still, this hasn’t stopped remortgage lenders from offering fixed term mortgages as an alternative to variable interest rate mortgages.
The crunch can only be attributed to the series of increases in the base interest rate of the Bank of England. This has, of course, led to the increase in the interest rates of the different variable interest rate mortgages, which is what many Britons have on their homes. This has left mortgage repayments practically impossible to manage.
The credit crunch is not expected to soften any time. And mortgage lenders and mortgage brokers are offering some relief by offering fixed rate mortgages as the home financing option of choice under current circumstances.
While fixed rate mortgages charge higher interest rates, it offers some stability and peace of mind to homeowners, especially first time homeowners, who are notorious for not knowing how to budget. Having a predictable monthly repayment amount is one distinct advantage of fixed mortgage rates. Homeowners can just manage their budget around the repayment schedule.
A fixed rate mortgage is a kind of mortgage where interest rates are “frozen” for a specific time period. Although borrowers can negotiate for different time periods, the most common are the two-year fixed rate mortgage and the five-year fixed rate mortgage. Fixed rate mortgages are never affected by the increases in the base interest rate that the Bank of England seems to impose every so often these days.
Phillip Evans is a finance expert who is in the business of helping consumers get finance, through his website, http://www.enablefinance.com he offers an arsenal of credit solutions for the nervous and experienced, residential or corporate borrowers in the United Kingdom.
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