Gregory Pennington

September 17, 2010 12:13 ET

Be Prepared for Future Mortgage Rate Rises

Debt management company Gregory Pennington warns that although mortgage rates are currently low, homeowners should be getting their finances prepared for a rise in rates in the future.

MANCHESTER, UNITED KINGDOM--(Marketwire - Sept. 17, 2010) - After research from Halifax found that the average percentage of income taken up by mortgage payments has nearly halved compared with 2007 levels, debt management company Gregory Pennington warned homeowners that low mortgage rates would not last forever, and advised them to ensure they are prepared financially for potential rate rises in the future.

Halifax found that the proportion of disposable income going towards mortgage payments has fallen from 50% in June 2007 to just 28% in June this year. This is even lower than the 34% average seen over the last 25 years.

This has been caused largely by the Bank of England cutting its base rate to 0.5% in April last year, which in turn has significantly reduced the cost of variable-rate and tracker mortgages.

An expert at debt management company Gregory Pennington commented:

"It's clearly good for homeowners that low interest rates have brought so many people's mortgage payments down. This has freed up additional funds for other things, with many people putting this towards overpayments on their mortgage, while others may have chosen to use it as spending money.

"Either way, homeowners should bear in mind that mortgage rates are likely to rise in the future, and this could add a lot to their monthly mortgage payments. Economists don't expect rates to rise for a while yet, but nobody knows exactly when it will happen - which is why being prepared is so important.

"We'd advise anyone in the fortunate position of having low mortgage payments to use the additional funds wisely, either by overpaying on their mortgage where possible or putting at least some of it into a savings account.

"It's also important that homeowners are confident they can manage any potential rise in interest rates. Anyone with any doubts on this should take a careful look at their finances and, if necessary, seek financial advice."

Notes to Editors

Gregory Pennington currently helps over 50,000 people repay their debts through its Debt Management Plan. The company is part of the Think Money Group, one of the UK's leading financial solutions providers.

Gregory Pennington are founding members of DEMSA, the Debt Managers Standards Association, which was established in 2000 'to promote good practice in the debt management industry'. DEMSA's code of conduct has received Office of Fair Trading approval, under its Consumer Codes Approval Scheme.

For more information, visit the Gregory Pennington website at http://www.gregorypennington.com/.

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