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Fewer Than Two In Five Uk Households Have Property Debt

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If I were a lender, I'd want to get some of these unproductive homes, carrying no mortgage debt, back into the debt market.

Thinking like a banker, a home valued in today's ponzi market £595,000 is not much use to a bank, when no one is paying a bank any debt repayments on it.

Better to have it valued at £340,000 and an upsizing couple signing up to a mortgage for 25 years paying interest and repayments on £300,000 of mortgage debt. At the moment such owners of £595,000 houses seem politically untouchable.

Mortgages: how many Britons have one, and how much do they owe?

Mortgages are just a fact of life, aren't they? Not for everyone – here are six key trends on housing, mortgages and debt from new ONS data.

22 Jun 2013

1. Fewer than two in five UK households have property debt

The UK might have a reputation as a nation of mortgage slaves – interest rates are often reported as if that's the case – but that's not the reality. The ONS figures reveal 9.2 million UK households had property debt in 2008/10 – that's 37.3% of the total.

This figure was actually a slight decrease from the 9.4 million households who had property debt two years earlier. Those households might be making those repayments for a while yet, though: between them, they have a total of £847,911,798,000 to pay off on their properties (median debt £75,000).

http://www.theguardi...-debt-uk-trends

According to the ONS, this property debt now stands at £847.9bn, up 3 per cent on 2006/08. This is a mighty big sum, amounting to well over a half of annual GDP, but the curiosity is that rather than worrying the pants off us, most of us don't seem to care. Only 13.6 per cent of those with property debt thought it to be "a heavy burden", down from 15.2 per cent in 2006/08. The percentage of people thinking it was "no problem at all" actually rose from 46.8 per cent to 49.5 per cent.

Fewer than two out of every five households had any outstanding debt on their main property at all, while half of those with debt owed less £75,000. Obviously, the highest levels of debt are found in London, but London is also the most prosperous area of the economy, with relatively fast growth.

http://blogs.telegra...just-dont-care/

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Looks like Cameron's plan to get elected by keeping interest rates low will backfire then.

3 in 5 UK Households are not getting the benefit of low rates, instead their savings are being destroyed.

Backed the wrong horse, didn't ya Cameron! rolleyes.gif

Edited by DogTired

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Looks like Cameron's plan to get elected by keeping interest rates low will backfire then.

3 in 5 UK Households are not getting the benefit of low rates, instead they're savings are being destroyed.

Backed the wrong horse, didn't ya Cameron! rolleyes.gif

Excellent point. Many older owners complain about their savings earning next-to-nothing, and about debtors being bailed out with their savings.

Although lots of them are madly focussed on value of their homes, which Gov policies are keeping high, many other older outright owners not so much bothered and more concerned about their savings.

They could of course downsize to help begin the crash. They can't have it both ways; house prices kept high + high interest on their savings.

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Yes, well 64 per cent of households are owner occupiers, that's 15 million. 36 per cent are renting, that's 8.3 million. (2011 Census figures).

Renters by definition don't have property debt.

The figure given for households having property debt is 9.2 million, but that's from 2008/10.

However, if the figure is still somewhere around 9 million out of 15 million, then the proportion is rather higher than fewer than two in five.

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Housing equity is set at the margins by the most recent buyers. It's only as real as the ability they have to service their debts.

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Looks like Cameron's plan to get elected by keeping interest rates low will backfire then.

3 in 5 UK Households are not getting the benefit of low rates, instead their savings are being destroyed.

Backed the wrong horse, didn't ya Cameron! rolleyes.gif

They can also see their children and grandchildren priced out of buying property carrying already high education debt/taxes with future careers of short-term contracts and unknown hours...on top of all that there is the pension annuity problem of more saving giving less, working for longer because the retirement age is shooting up, unknown age or amount, and to finish it all off nicely the long-term care and dementia problems due to living longer coming up from behind......that is without the obesity, high blood pressure, diabetes, heart and stroke problems due to unhealthy living because of the stress of it all, more pill and potions extending life treating the symptoms not the cause...........governments like to make what were once small problems into bigger ones by meddling when they don't have to or shouldn't have done......life is too short to worry about what may never happen, worry only when it does. :)

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They can also see their children and grandchildren priced out of buying property carrying already high education debt/taxes with future careers of short-term contracts and unknown hours...on top of all that there is the pension annuity problem of more saving giving less, working for longer because the retirement age is shooting up, unknown age or amount, and to finish it all off nicely the long-term care and dementia problems due to living longer coming up from behind......that is without the obesity, high blood pressure, diabetes, heart and stroke problems due to unhealthy living because of the stress of it all, more pill and potions extending life treating the symptoms not the cause...........governments like to make what were once small problems into bigger ones by meddling when they don't have to or shouldn't have done......life is too short to worry about what may never happen, worry only when it does. :)

Good post..we are living in our heads far too much..worrying about the future and creating an imaginary hostile environment for ourselves, while trying to solve all these perceived problems and threats that are being added to on a daily basis and put under a spotlight by an emotive press who cry about freedom of expression any time someone challenges them ..we imagine it will all be solved if only we can buy a house and live happily ever after.

Edited by GinAndPlatonic

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If the median mortgage debt is £75k and the average house price is around £165k then a hpc of the order of 30% should be manageable?

I think the 'problem' is that the counter-party for knocking on 100% of the household property debt is the UK banks; that is where the risk is concentrated in the UK.

Households in aggregate can take the hit, but if the manner of the correction caused banks' interest income and fee income to reduce at the same time that the need to provide for future losses and acknowledge crystallised losses on loans put pressure on profits from the other direction, then a correction could (and probably would) send bank P&L's back into the red. That would mean no retained profits available to facilitate recapitalisation, essentially anchoring the banking sector to the state as a politically dubious parasitic dependant.

Picking up on the thread about letting banks fail, the problem is that the government committed itself to a strategy when it upped the Financial Services Compensation Scheme deposit insurance limit up to £85k. Now the government has skin in the game if the bank fails. Given that they also committed themselves politically to reducing the deficit to zero and then making in roads into the debt, they are highly motivated to do what they can to stave off a swift reduction in house prices because of the risk of a need for increased borrowing that it exposes them to via the insolvency of the banks.

Of course, arrears don't lead to crystallised losses for the banks in a regime of forbearance and extend and pretend - so we are seeing epic levels of forbearance. Further, negative equity doesn't lead to crystallised losses for the banks' balance sheets to absorb unless the banks repossess. The continuing tracking down of repossession rates is a good indicator that the UK economy has become very closely aligned to the interests of the cartel commercial lenders.

In short, since 2008, taken in the round, UK policy has gradually morphed from an assessment of what the hell happened and how to fix it into a 'pragmatic' commitment to the idea that the best way for the key actors (government and the banks) to extricate themselves from the mess, is to go back to the pre-2008 debt orgy. My interpretation of one of Mervyn King's final Inflation Report press conferences (the February one, I think) was that he was saying as plainly as he could that this is the wrong thing to do; the reality is that the pre-2008 trajectory was an unsustainable credit boom and thus it is not a path to which we can return.

It seems that the next chapter will be to see whether Carney is all hat and no cattle or whether he will print, and what happens to Sterling and gilts if he prints whilst the Fed tapers.

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Since 2 in 5 households are renter-occupied that actually leaves only 1 in 5 that own outright.

The article also states:

Fewer than two out of every five households had any outstanding debt on their main property at all

So they might have a second property which is mortgaged up to the hilt.

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Depends on definition of property debt....How many personal loans are secured on property.?

If you have a property?....all of them.

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Looks like Cameron's plan to get elected by keeping interest rates low will backfire then.

3 in 5 UK Households are not getting the benefit of low rates, instead their savings are being destroyed.

Backed the wrong horse, didn't ya Cameron! rolleyes.gif

Low rates generally support house prices so they have benefited from a higher net worth due to the government policy of keeping house prices high (or at least, until their kids try to buy a house whereupon they will be required to provide a BoMaD deposit to 'get them on the ladder').

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Isnt there nearer 12 million mortgages?

Presumably 'households' with mortgage debt doesnt equal 'houses with mortgages secured on them' I guess BTL makes up the difference and some 'households' have more than one mortgage.

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Isnt there nearer 12 million mortgages?

Presumably 'households' with mortgage debt doesnt equal 'houses with mortgages secured on them' I guess BTL makes up the difference and some 'households' have more than one mortgage.

Some 135,000 to 250,000 reported to have second-homes.

http://www.dailymail.co.uk/news/article-1303573/Record-250-000-second-homes-Britons-holiday-home-saving-schemes.html

http://www.theguardian.com/books/2013/mar/30/second-homes-expensive-andrew-motion

Then there are all the BTLs many have to farm young people for rents.

Whilst David Cameron gives younger people the dream of home-ownership with Help-To-Debt at £200K+ of debt, whilst so many older property owners haven't felt a moment of stress in their protected lives during the 'recession'. Some even been further rewarded with reflation via QE/FLS, and homes worth even more than 2007. Many more older owners still eager to dive in for more BTL investing as it only goes up.

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Some 135,000 to 250,000 reported to have second-homes.

http://www.dailymail.co.uk/news/article-1303573/Record-250-000-second-homes-Britons-holiday-home-saving-schemes.html

http://www.theguardian.com/books/2013/mar/30/second-homes-expensive-andrew-motion

Then there are all the BTLs many have to farm young people for rents.

Whilst David Cameron gives younger people the dream of home-ownership with Help-To-Debt at £200K+ of debt, whilst so many older property owners haven't felt a moment of stress in their protected lives during the 'recession'. Some even been further rewarded with reflation via QE/FLS, and homes worth even more than 2007. Many more older owners still eager to dive in for more BTL investing as it only goes up.

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Looks like Cameron's plan to get elected by keeping interest rates low will backfire then.

3 in 5 UK Households are not getting the benefit of low rates, instead their savings are being destroyed.

Backed the wrong horse, didn't ya Cameron! rolleyes.gif

I suspect it won't make any real difference either way to his re-election chances. It's not like there's a political party, serious or otherwise, promising to do any different on that one.

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