Payment shock borrowers phased out

The online mortgage company has said it is likely that the 40,000-60,000 borrowers coming off low two-year fixed rate deals over the next 10 months will now be regarded as non-conforming customers by lenders - making it far more difficult to find a comparable deal.

Francis Ghiloni, mform.co.uk marketing and business development director, said: “With overall consumer debt rising, there has been a significant increase in the number of people struggling with making repayments, which means many will have damaged their credit ratings and now be seen as being non-conforming borrowers by lenders - either declining to offer them a mortgage or only provide one at a much higher rate of interest.

“Our research shows that between now and 2010, some 3.7 million people intend to borrow over four times their salaries when they take out a mortgage and a further 4.5 million intend to borrow between three and four times. In the current climate, many lenders will be less willing to take on this type of risk.”

The firm has stressed the need for borrowers to search the whole market to ensure that they find the best terms available to them.