Mortgage costs halved for mum who feared losing home

NHS worker Katy Lowry-Phillips has three children

A woman with disabled children feared losing her home because of increased interest rates as her fixed rate mortgage deal came to an end.

Katy Lowry-Phillips, from Hawarden, Flintshire, said coming off her deal could have pushed up her monthly payments from £750 to £1,200.

She got help from the Welsh government’s Help to Stay scheme which has more than halved her payments for the next five years.

On Thursday the Bank of England announced an interest rate cut from 5.25% to 5%.

“Things are much better now,” she said.

“I’m not dreading each bill coming though the post.”

Interest rates are at a 16-year high

Despite Thursday's cut, interest rates remain a lot higher than they were when many people obtained fixed rate mortgage deals, leaving them facing a big hike in payments when their deals end.

Ms Lowry-Phillips works for the NHS and has three children, two of whom have autism and complex learning disabilities.

The 45-year-old said the cost of living pressures of recent years had put an increasing strain on her family’s sole income.

“I’m working as many hours as I can, but the bills were racking up and I’d built up a bit of debt from the years of being on my own,” she said.

Her children’s disabilities involve additional expense, but she said: “They’re wonderful, such rays of light.

“They’re both dual incontinent, they’re almost nine, but they’re like toddlers really.”

Ms Lowry-Phillips said she often needs to replace things around the house like mattresses and carpets.

The family home has also been specially-adapted for their needs, so the prospect of rising costs forcing her to sell up was “really frightening”.

Help to Stay can help when a fixed rate mortgage ends

The Help to Stay scheme provides help with existing mortgage payments to people at risk of losing their home.

It involves taking out a loan secured on the property which is then paid to the mortgage lender to reduce payments.

Only properties worth less than £300,000 are eligible and applicants must get independent debt advice before applying.

After a five year interest-free period, interest is charged on the loan at the Bank of England interest rate plus 2%.

Estate agent David Ricketts says the time is right for an interest rate cut

For Ms Lowry-Phillips, the scheme has taken away her anxiety about mortgage payments going up and given her “breathing space” to manage her finances.

But she still wanted to see a cut in interest rates which she believes are “unmanageable for a lot of people".

Interest rates predictions

That is echoed by Cardiff estate agent David Ricketts, who said the cut will give “a little bit of confidence” to the housing market “which is very much needed".

The Bank had been increasing rates to control the rapidly rising prices of recent years, but headline inflation has now hit its 2% target, though it remains uncomfortably high in the service sector of the economy.