'Rate increases not to blame for cost cutting'

A third of homeowners believe the global economy is to blame for the current economic downturn in the UK, according to an independent mortgage broker.

New research by L&C shows that half of homeowners expect the current economic crisis to last until at least 2010, with property prices expected to fall by 15 per cent in the time.

But Richard Morea, technical manager at L&C, said that rising food and fuel costs were the reason more than 70 per cent of the people surveyed by the broker were cutting back spending at home – and not rising mortgage rates.

Mr Morea said: "Homeowners are catching it from all angles not only with higher mortgage rates but increasing fuel, food and energy costs."

"It''s unsurprising that they are demonstrating a siege mentality," he added.

The research by L&C also shows that fixed-rate mortgages remain the most popular option for homeowners.

According to new research by Lloyds TSB, two-thirds of people are searching for mortgages that are competitive over the long-term.

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