Within the first three months of 2012 almost all big banks of UK including Halifax, RBS, Clydesdale and Yorkshire Bank etc. have raised their mortgage rates. Which obviously decreases the average buyer's ability to buy a house?
The mortgage lenders have given quite a tactful reason for this increase; they say that since there is an increase in the Libor rate (the average interest rate that the biggest London banks charge when lending to each other) has risen because of the crisis in the Eurozone.
Which makes it more expensive for the mortgage lenders to borrow money from each-other; as a result of this they inflict this damage on the customers by raising their SVR (A rate of interest set by a lender on a mortgage).
There however is a double standard followed by the lenders because it is found that 95% of lenders had failed to fully pass on cuts in the base interest rate to their SVR mortgage customers.
Whomsoever we blame the prospective property buyer and sellers are the ones who suffer because of this. In a broader sense about 2,000,000 house owners will be affected by this increase in the price, and more than 3,000,000 to 5,000,000 prospective buyers will also be affected as they won't be able to cope up with the rising mortgage rates. Many people will lose their houses and the rate of repossession will increase, while at the same time new potential buyers will have to arrange for backup money while planning to buy a house. In an economy where struggling families are already strained in making to-ends meet because of the recent rise in the petrol price; how is it possible to pay an extra £ 300 per year for a £ 100,000 mortgage?
A creative solution to this misfortune is that present homeowners rent a part of their property so that they can generate the newly imposed taxes, a benefit for the eventual buyer turned tenant is that he will get time to plan and save money so that he can afford a proper house without the risk of being thrown out!
Towards the end we can conclude that even though the mortgage rates are rising and most house owners and new buyers are disappointed about it but that is not in our hands but renting an apartment to help you pay for the 'Extra' mortgage is surely in our hands.
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