Alarm bells ring for house buyers

Many could be affected by interest rate rises

High property prices are forcing house-buyers to stretch their finances to the limit, research shows.

Two surveys suggest people are borrowing more than they can afford and are becoming increasingly anxious about their ability to pay their mortgages.

According to the credit protection company, the CPP Group, a quarter of home-owners aged between 25 and 44 fear they will be unable to meet their repayments in the next four months.

And a similar survey for the charity, Shelter, shows one in five adults are struggling with their housing costs.

Both mortgage and rent payers are feeling the squeeze on their finances, potentially putting them at risk of losing their home

Ben Jackson, Shelter

Although mortgage rates are at an all time low, many home owners will struggle to pay their mortgage if rates increase, it is suggested.

The CPP survey of 2,000 people found that 15% of people were concerned about keeping up mortgage payments, compared with 3% in January this year.

The group warned this indicated people were taking on levels of borrowing they would no longer be able to afford if interest rates increased.

There is also cause for anxiety among the rented sector.

Savings black hole

More than a third of people who contacted Shelter last year had fallen into rent arrears.

The charity revealed 36% of the 16,500 people who asked it for help during 2001, had been unable to keep up with rent payments because they suffered from the high cost of housing.

The group also found that more than a quarter of people who pay a mortgage or rent had no savings to fall back on if they lost their job.

Ben Jackson of Shelter said: "These findings demonstrate a worrying lack of financial security, particularly amongst the one in four with no savings to fall back on.

"With the escalating cost of housing, both mortgage and rent payers are feeling the squeeze on their finances, potentially putting them at risk of losing their home."

The charity has launched a website, sponsored by Halifax, offering advice on housing problems.

The site can be found at www.shelternet.org.uk.

In the CPP survey, about 50% of people said they had debts they feared they would not be able to repay in the coming months, rising to 65% among people aged between 25 and 34.

A further 9% of people were worried they would struggle to pay their council tax, while 9% also foresaw having problems meeting their utility bills.