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Repossessions feared if rates go up

Friday May 14th 2010

A rise in interest rates could lead to over five million homeowners facing the risk of eviction, according to research by charities.

Shelter says many households on tight budgets after being hit by the recession will not be able to afford to keep up mortgage payments if interest rates rise.

A third of homeowners cannot afford a rise in their household budgets, said a Shelter spokesman.

"Some 5.4million mortgage holders haven't even thought about how they will pay their mortgage if interest rates go up. We know for a significant number of people, just keeping on top of their current mortgage repayments is a constant struggle," he warned.

On a positive note though, repossessions fell slightly at the start of this year.

However, homeowners with tracker mortgages face rises if rates go up and many borrowers whose old deals have ended saw their mortgage cost increase.

An expert at Global Insight, said: "Any rise in interest rates would be liable to send a significant number of financially stretched homeowners over the edge."

Copyright © Press Association 2010

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