The introduction of ‘stress testing’ - due to be rolled out as part of the Mortgage Market Review - could possibly prevent some borrowers from securing a variable rate mortgage, in order to protect them from becoming the next generation of mortgage prisoners.
In March 2012, the Financial Services Authority reported that as many as 45% of borrowers, an estimated five million people who had taken out a mortgage since 2005, could be mortgage prisoners.
And in an ITV News Index poll carried out by ComRes, it was reported that 39% of mortgage holders would be required to make cuts in order to afford any increases in their mortgage repayments.
Andy Shaw, director of Mortgage Rate Cover, said: “We are now seeing more and more reports in the press of when interest rates will rise and we know it is only a matter of time. Mortgage Rate Cover is a general insurance product that protects borrowers against increases in base rate or LIBOR rate, without making any changes to an existing mortgage or reference to LTV, LTI or mortgage repayment type. Our prices reflect the current market but as rate rises become imminent; our prices will have to reflect this. There has never been a better time to purchase this product.
"The initial predictions made by the Bank of England have been brought forward, and we have to ask whether this will be when the rate rises or whether in fact, it may come sooner than anticipated.
"If you wish to secure your clients against rises in base rate or LIBOR rate or provide a solution to ‘mortgage prisoners’, register with Mortgage Rate Cover today."