Mortgage Rates Cut but Borrowing Pressures Remain

Several major lenders, including Barclays, HSBC, and TSB, are reducing interest rates on new fixed mortgages starting Friday, providing a slight relief for borrowers. However, despite these cuts, borrowers still face higher costs than in recent years. The number of homeowners struggling with repayments has increased, with the first stage of home repossession processes rising. This situation is also affecting tenants, as financially-squeezed landlords resort to no-fault evictions.

The fixed mortgage interest rate remains unchanged until the deal expires, typically after two or five years. This year, approximately 1.6 million borrowers with cheap fixed-rate deals will see their rates expire. Frequent interest rate adjustments by lenders reflect changes in their funding costs, compounded by uncertainty regarding future Bank of England rate cuts. Despite expectations of a rate cut in June, homeowners continue to feel the strain of higher repayments amidst rising living costs.

Repossessions remain relatively low compared to historical periods of high interest rates, with lenders keen to avoid costly repossessions. However, possession claims have risen by 28% in the first quarter compared to last year. Additionally, landlords facing increased costs are contributing to a rise in no-fault eviction proceedings, further exacerbating the housing crisis. Housing charity Shelter and the Law Society have called for extended legal aid to help those at risk of homelessness.

For more details, visit BBC News.