Monday, Oct 29, 2007
Surely this accounts for most of UK households?
Firstrung: Mortgage borrowers need to heed warning signs on debt and net worth
More insightful comment from the guys at Fool.co.uk. Their suggestion is that if you have two thirds of your mortgage outstanding and no savings you could be in financial danger. That surely must be over half of UK households...Fool.co.uk has highlighted that borrowers run the risk of hitting their 'danger threshold' if they do not take stock of their finances. The firm has drawn attention to the fact that those borrowers falling outside the Bank of England's defined 'danger thresholds' are some of the most likely to end up falling into arrears.
Posted by converted lurker @ 12:56 PM (1148 views) Add Comment
8 Comments
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1. ben said...
Quote: "if you have two thirds of your mortgage outstanding..."
What does that mean exactly? Most people with mortgages remortgage every few years... and so as soon as they remortgage they have 100% of their mortgage outstanding. For example:
If someone buys a house for £100k and gets a £80k mortgage... and then 3 years later remortgages for £70k and the hosue price has increased to £130k, then they still have 100% of their £70k mortgage left to pay!
Or do they mean the ratio of how much mortgage you owe compared to the propertys market value (54% in the example above)?
2. dbnazz1 said...
'If they don't take stock of there finances'.
Well, their outgoings are so high relative to their incomes, that they are unable to build up some cash in the bank as a safety net. And thats before you consider the 2 year discounted mortgage rates deals coming to an end which will further squeeze peoples pockets. lets not forget, this is not one or two people, but hundreds of thousands.
3. Axxo said...
Ben, your figures don't add up... if you buy a house for 100k and get 80k mortgage, then 3 years later the house is worth 130k then you only have £50k worth of equity and most lenders don't allow you to re- mortgage the full 100% on the fixed mortgage rate they would be on, so more likely 90%....
"those with debt repayments of more than 55 per cent of their household income" is this including the mortgage? Because most people I know have rent/mortgage of 55% then debt repayment after that!!
4. Luckyone said...
Quote: 'if you have two thirds of your mortgage outstanding..."
Surely this means that if you started off with a 100,000 mortgage, and you still owe more than two thirds, i.e. 66,000plus? If so then it's irelevent what the current property valuation is, or whether you
ve re-mortgaged?
5. speculatorone said...
I have just done my usual daily search on rightmove for new property added in last 24 hours and there have been no new properties listed today?
This is the first time this has happened, there is always something, a worrying sign, I hope!
6. Si said...
Nore here (Bristol) ... well actually, just 12.
Stark contrast to the 100+ per day that have been added of late
Maybe rightmove's database is starting to creak
7. Filbster said...
So if no properties are hitting the market then it is a sign of impending doom? No doubt if lots of properties were flooding onto the market then you would be claiming that increased supply would mean reduced prices and therefore impending doom.
You can't have it both ways.
8. harold said...
"if you have two thirds of your mortgage outstanding..."
then quite simply you're probably fooked.