FSA warns over mortgage debt levels

The Financial Services Authority (FSA) has warned that many homeowners are risking financial problems in the future by borrowing too much on their mortgage.

The watchdog said there are a large number of homeowners vulnerable to future interest rate rises, with many homeowners on a tracker or variable-rate mortgage deal facing higher mortgage payments when the base rate increases.

The FSA added that in the first nine months of 2010, almost a third of new mortgages were for more than 3.5 times the borrower`s income - the first time it has reached this level since 2007.

An expert at debt management company Gregory Pennington said: "Mortgage lenders will only lend what they feel is affordable for the borrower, but people`s circumstances can change. For example, sudden unemployment could leave homeowners unable to afford their payments - and the higher the debt, the bigger the problem could be.

"Furthermore, there are a lot of people who are only just able to cover their mortgage payments today and could really struggle when rates go up. As such, we urge anyone concerned about their ability to cope in the future to seek expert advice on how to improve their finances."



Gregory Pennington offer debt advice and debt management plans, as well as a range of other debt solutions. If you are worried about debt, contact one of our expert debt advisers now.