Shock on way for fixed-raters

HOMEOWNERS are facing possible hikes of up to 60% in mortgage repayments next year - and are being urged by Citizens Advice to take action now. Following this summer's credit crunch and the collapse of Northern Rock, the Financial Services Authority said there was 'a very real prospect that conditions will worsen further into next year, in terms of both liquidity and credit risks'.

According to FSA data, market conditions could see at least 1.4m. UK homeowners on fixed-rate mortgages ending next year facing a sharp increase in loan repayments.

CAB manager Kate Raleigh said affected homeowners should take matters into their own hands before it is too late - even if it means selling up.

'The situation will make it even more difficult for people on - or trying to get onto - the housing ladder,' she said.

Mrs Raleigh said most people who came to the CAB for debt counselling were not homeowners because they did not have the money to get onto the housing ladder.

'It's important to seek advice, both from the lender and organisations such as the CAB, before it's too late,' she said. 'The banks would rather take possession of the property and take the sale cost than recoup the amount lent, which would be less, so it's likely that they would do so if it came to it.'

FSA retail managing director Clive Briault told the council of mortgage lenders annual conference that the authority was to take an urgent look at whether lenders were complying with FSA rules and treating customers fairly with their practices for the handling of mortgage arrears and repossessions.

Property sales in Guernsey appear to have slowed in recent months, with only four open market sales in October and six in November, according to ABConveyance statistics produced by Ray Sebire of Unusualities of Guernsey.

'That's two consecutive months of low sales,' said Mr Sebire. 'So one does wonder if the English problem has translated to Guernsey.'

But he added that in his experience, November and December were usually slow months and things might pick up next year. 'It's difficult to say,' he said.