Source: FT Adviser —
Homeowners weighing up forbearance options in light of rising interest rates should be making cuts to their subscriptions before they consider making changes to their mortgages, brokers have said.
This month, chancellor Jeremy Hunt and the Financial Conduct Authority repackaged existing guidance for lenders on the options available to them if a borrower paying off one of their mortgages says they can no longer afford it.
With inflation at a 41-year high, wages stagnant and the average two-year fixed rate on a mortgage now 5.84 per cent, many borrowers will feel the pinch next year if they locked into two-year rates at historic lows last year.
Switching a borrower from a repayment to an interest-only mortgage means they only make payments towards the interest part of the mortgage, rather than towards the capital borrowed as well, partner at Addleshaw Goddard, Rosanna Bryant, explained.
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