Mortgage repayments stretching families

Recent rises in the interest rate have made it more difficult for families to meet their mortgage repayments which, for many, have increased over the last year.

The five increases in the rate have meant that many families are cutting back on taking out additional loans and savings money.

Those living in rented accommodation have also faced difficulties as other forms of borrowing have become more expensive during this period.

But predictions suggest that the interest rate is not set to rise again for some months, which may allow families to relax and consider saving more money or taking out other loans.

Sean Murphy, director of strategic planning at Alliance & Leicester, said: "Families are cutting back on their borrowing and their saving to help ensure they can afford higher mortgage and other household bills.

"Even though average interest rates on unsecured borrowings have actually fallen over the last 12 months, that has not been enough to tempt mortgage borrowers to take on more unsecured debt.

"Their family budgets have been under pressure and they have cut their cloth accordingly."