Thursday, Jun 21, 2007
More evidence that the UK is struggling with base rates at just 5.5%
Firstrung: Credit squeeze bites as missed loan payments increase
More than 7,716 loan repayments are going unpaid every day as the recent Bank of England rate rises start to bite, new MoneyExpert.com research* shows... Up to 1,389,000 repayments on personal loans have been missed in the past six months, the independent financial comparison website says. That works out at around 231,502 repayments missed a month, or around 7,700 each day.
Posted by converted lurker @ 08:15 AM (129 views) Add Comment
7 Comments
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1. Orwell said...
This is terrible! It is not schadenfreude either, but many of these people have been badly led on and then let down by the Financial Services 'Industry'.
Regrettably although I know what the definition of obtaining a pecuniary advantage by deception is, I doubt if a prosecution against these banks etc. would be successful.
The FSA and FSO should start intervening here in the misselling of mortgages and act before this does even more damage to the frail reputation of the banks and insurance companies etc.
2. maddison said...
I am afraid to say that these figures are still extremely low compared to the overall debt. This is the principal reason that banks and policy makers aren't as worried as we think they should be.
3. dohousescrashinthewoods said...
When interest rates go down, asset prices rise (and people take on debt).
When interest rates go up, asset prices fall (and people default on debt).
It is as close to a mathematical certainty as the real world allows.
4. Orwell said...
When interest rates go down, asset prices rise (and people take on debt).
When interest rates go up, asset prices fall (and people default on debt).
It is as close to a mathematical certainty as the real world allows.
WHERE DID THIS COME FROM DHCITW?
5. maddison said...
It is a matter of timing. When interest rates go up asset prices do not immediately go down - it is not a certainty. It is only a certainty if the debt become unaffordable.... At the moment the debts do not look unaffordable so asset prices have not been falling since August in fact they are going up! OK OK if interest rates rise significantly to say 7% or more then maybe a significant proportion of people will not be able to pay. BUT the likely hood of them going that high is only if there is high wage growth which of course means debt becomes more affordable. It is a delicate balancing act that does and has gone wrong before. I still think the critical issues are one of supply: BTL offloading overpriced flats while builders are still committed to building them. But in the abscence of poor economic news then BTLers wont sell in a hurry.
6. dugmug said...
Maddison...at the current 5.5% rate, repossessions and CCJs are on a steadily upward trend and new mortgage approvals have fallen for about 5 months running. Prices will fall if there are less buyers than sellers (already started to happen), but will fall faster if there are forced sales (repossessions are not yet historically high but already going in that direction, CCJs are at record levels already). There were economics articles linked on this site a couple of days ago saying that a 0.25% points increase could cause serious damage, and it's obvious that with prices (mortgages) 3+ times higher than in the early 1990's you have the same effect even if rates are 3 times lower. So, I don't think rates need to be 7%, in fact I don't think they even need to go any higher - it will just happen quicker if they do.
7. Dadm1975 said...
I am moving to Zurich and purchasing there. Out there, you cannot get a mortgage unless you have a deposit of 20% and the maximum lending amount based on earnings is 33%, based on interest rates of 5% (currently they are 3ish).
Just goes to show how responsible the nation and the banks are compared to the UK. Here, they will lend you 5 to 6 times your earnings at 110%.
What the nation go down the plug hole. In someways I hope labour win the next election. I don't want the Conservatives to be blamed for the fall out when it happens.