The recent interest rate rise is likely to see the number of people saving regularly decrease even further as peoples monthly mortgage repayments increase.
Someone with a £100,000 mortgage who is coming off a two year fixed rate deal in the next few months will face an increase of around £100 in their monthly repayments.
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Richard Watters, managing director of A Quick Sale, is warning that this trend could lead to an increase in home repossessions, as fewer and fewer people have money put aside to fall back on should they lose their jobs or experience a change in personal circumstances.
He said: Our research has found that only one in 10 people have enough savings to cover mortgage payments and living expenses should they lose their jobs, while only 13 per cent have a mortgage protection policy that will meet their monthly payments. People who have savings seem to be having to draw on them to keep up with the cost of living and are cutting back on what they deem to be the non-essentials such as mortgage protection policies.
Of the lucky few that can afford to save, nearly a quarter are unconcerned that they arent able to save enough to manage should an emergency or an unexpected big expense arise. In comparison to this, nearly a fifth dont worry about saving as any large costs will be put straight onto a credit card.
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Richard said: An increasing number of people are relying on credit cards and loans to meet unexpected costs that arise, which means that debt is also increasing. Recent figures have shown British personal debt has reached an all time high of £1.38 trillion twice the level of Continental Europe.
Back in February the Royal Institute of Chartered Surveyors was predicting that over 50 families will lose their homes every day in the UK during 2007 because they can no longer maintain their debt repayments. Increasing mortgage payments, fewer savings and rising debt is unfortunately a recipe for this to increase even further, and our research has shown that repossession is a major concern for around 7.8 million people.
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However, for people that do find themselves several months in arrears, it doesnt mean that they will lose their house. Although selling your home to raise enough capital to pay off debts is a last resort, property purchase companies such as A Quick Sale can provide tailored solutions to people that enable them to stay in their home, avoid repossession and the associated credit blacklisting.
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