Wednesday, Oct 10, 2007
Nice solid HPC article...
Telegraph: Monthly mortgage repayments hit 15-year high
Home owners are paying more on their monthly mortgage repayments than at any time since the property crash in 1992, according to official figures. The figures come as increasing evidence emerges that the property market is heading for a sharp slow-down, as mortgage rates increase and people find it increasingly difficult to get on the housing ladder.
Posted by tyrellcorporation @ 10:03 AM (788 views) Add Comment
5 Comments
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1. planning4acrash said...
This is old news, how high will repayments be when fixed rates are re-set over the next year? The highest since the 70's? The 1930's? Because sure as light follows day, repayments are going up. Where next?
2. Sold My Soul To The Never Never Never said...
Perhaps like in 1991 when I had mortgage payments of £365.00 IO (36K mortgage) a month and my wages were £725.00 a month - net salary 12K a year!! Note that this mortgage is 3x salary and interest payments are nearly 50% of my take home pay. Also bear in mind that Miras is on the first £30K too! Not much money left to exist on just for the sake of being a property owner.
3. David Smith's Sub Prime. . . said...
The average mortgage lender charged a rate of 5·91 per cent in August, the highest level for six and a half years.
This figure is likely to have increased substantially in September.
Earlier this week Capital Economics, a research house, said that house prices are set to fall by six per cent over the next two years — the gloomiest forecast so far from any economists.This would take the average prices down by about £13,000 to £205,000.
AND THE REST!!!!
4. cyril said...
These figures don't include repayment of the capital sum, which can be quite a big chunk of the total cost of a mortgage these days, as interest rates have been fairly low and house prices high.
Now prices are beginning to wobble, people have at last started to seriously think about how they will pay off their mortgages.
5. dugmug said...
Yes Cyril, I love how the CML report their figures based on interest only, when as you rightly point out the majority of homeowners (not, admittedly, BTL however) will have repayment mortgages and the capital sum due will be vastly bigger than any time in the past because house prices are vastly bigger than any time in the past. I (dis)like how the article only puts in a throwaway comment about this - they mention it, to cover their bottoms, but so quickly and glibly that most readers will think it's a relatively insignificant factor in the grand scheme of things. It actually makes a HUGE difference...
1992: Cost to buy of £70,000 (about the average at that time) and assume 10% deposit down, monthly mortgage repayments based on 11% interest rate (again, true at the time) over 25 years would be £623, of which £413 (averaged out over the whole term) would represent the interest.
2007: Cost to buy of £200,000 (about the average now) and assume 10% deposit down, monthly mortgage repayments based on 5.75% interest rate over 25 years would be £1146, of which £546 (averaged out over the whole term) would represent the interest.
Interest portion has risen by £133 or 32%. Repayment portion has risen by £390 or a whopping 186%!!!!
So, if interest portion is at a 15 year high, just think how high the repayment part is!! Forced sales will only increase if unemployment rises??? I don't think so.