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JST

Alarming Spike In Repossessions Before Housing Bubble Bursts

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I hope I'm ok to post this, as I note this article is already in the blog, however, I thought it was worthy of general attention. I know we're not allowed to quote whole article's, so I've quoted selectively (the whole article is worth reading though).

It was in Saturday's Telegraph Your Money section and is by Ian Cowie, Personal finance editor. It starts with a view on how the figures have been spun by lenders and the government:-

If your neighbour's home is repossessed by the mortgage lender, it's a bit of a recession in the housing market. If you lose yours, it's a crisis.

So, for now, most of us can afford to be complacent about this week's sharp increase in the number of repossession orders. After all, it's not our problem is it?

That was the reaction lenders and the Government were looking for when the County Courts announced a 66 per cent increase in debt orders. Shortly after the bad news hit my email box, it was followed up by two unsolicited 'clarifications' from the Council of Mortgage Lenders and, blimey, the Treasury.

What is it with press officers these days? They all seem to think they are Alastair Campbell. Although my dealings with him have been limited to a couple of convivial dinners, all I can say is that this sort of spinning has a contrary effect on me. I determined to take a closer look at the figures.

The article goes on to ponder how people who have overstreched will fare if rates go up

As is so often the case, the more you look, the more you see. Nearly 20,000 households have fallen far enough behind with their mortgage payments to justify a final warning from the courts - even while rates remain at levels so low they would have seemed unimaginable 15 years ago.

Please forgive the italics for emphasis but what on earth will these people do if rates go up next year? More importantly, how many others have overstretched themselves to the point where a rate rise could push them off the wire?

On the issue of debt:-

no market moves in a straight line forever and house prices have had a very good run. British consumers now owe a grand total of £1,100 billion between them - rather more than the combined national debts of Africa and South America.................Discussing the figures with a young economist, he opined there was "nothing to worry about" and that "debt is not necessarily a bad thing". Feeling like Methuselah, I asked him how old he was in 1991. Back came the answer; 12.

So, of course, he had no recollection of reporting on repossessions running at 1,500 homes a week right through that dismal year. He had never spoken to tearful former-homeowners who, in one case I recall, had lost their property because of debts run up to fund home improvements.

And best of all:-

Anyone planning to put property in their pension next year should remember that nobody rings a bell at the top of the market. But a 66 per cent hike in repossessions may serve to alarm some.

A note of concern is also sounded for savers:-

Remember that if too many debtors' problems become too big, then lenders also have a problem. Without wishing to seem alarmist, if too many lenders' problems become too big, then savers also have a problem. No wonder shares in mortgage banks like Alliance & Leicester and Bradford & Bingley are yielding more than five per cent - that's better than they pay most depositors - and you can obtain a 7.5 per cent dividend yield from stock in Lloyds TSB.

The full article is here http://portal.telegraph.co.uk/money/main.j...9/ixperson.html

Certainly one of the more bearish mainstream media articles I've read this year.

Edited by JST

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  • 333 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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