Nearly 200,000 Families At Risk Of Losing Their Homes After Falling Behind With Mortgage Repayments

[interestrateripoff]

http://www.dailymail.co.uk/news/article-2507628/Nearly-200-000-families-risk-losing-homes-falling-mortgage-repayments.html

The country’s 11.2million households with a mortgage have become used to rock-bottom mortgage repayments

And many are not braced for the ‘payment shock’ when they inevitably rise

Figures show a total of 195,900 mortgages are currently in arrears, which means the homeowner owes at least three months’ of monthly repayments

Of that number, 42,500 have a serious problem, owing more than one year’s worth of monthly mortgage repayments

..

He said: ‘It makes sense for people to think ahead now to how they will manage their finances to cope with higher interest rates and higher mortgage payments, as and when rates rise in the future.’

..

This would have meant monthly repayments of £821, which means the family is currently saving £151 a month on their repayments from the lower interest charge.

Experts say people have got used to their lower monthly repayments and also used to spending the money that has been saved from their cheaper mortgage on other things.

I'd like a breakdown of the figures about where in the UK these 42k are.

Still at least that extra £151 will be useful for meeting higher energy and food bills... I wonder what the modelists are seeing when they increase rates how many of those currently not in trouble will end up in default?

[fluffy666]

I'd like a breakdown of the figures about where in the UK these 42k are.

Still at least that extra £151 will be useful for meeting higher energy and food bills... I wonder what the modelists are seeing when they increase rates how many of those currently not in trouble will end up in default?

Didn't realize you could have a year's arrears and still be in the house..

But it's a reminder for those who think that IRs will go up anytime before the election.

[TheCountOfNowhere]

Didn't realize you could have a year's arrears and still be in the house..

But it's a reminder for those who think that IRs will go up anytime before the election.

Government backed forbearance perhaps.

Zombie Government supporting Zombie Banks supporting Zombie Households.

We are living through the decade of the living dead.

[Ash4781]

Forbearance and reduced provisions at the banks. The boe warned on this but it will be alright for a while as can keep the plates spinning.

[spyguy]

Didn't realize you could have a year's arrears and still be in the house..

But it's a reminder for those who think that IRs will go up anytime before the election.

We've got a budget deficit of ~7% and a current account deficit heading towards 5%.

The cost of credit - rather the BoE a base rates - will be determined off these shores, not within them.

[winkie]

Forbearance and reduced provisions at the banks. The boe warned on this but it will be alright for a while as can keep the plates spinning.

Yes.....but also whose responsibility will it be to house the repossessed, homeless families.......is it better and more cost effective to keep them living paying nominal interest payments than having to find private rented accommodation for the tax payers to pay high rents for....it also helps keeps the value under wraps thus protecting the lenders assets.

[slacker]

Didn't realize you could have a year's arrears and still be in the house..

I've a suspicion this is a scandal yet to explode - especially in Europe.

I may have misunderstood, but I thought I read something recently about Spain or Greece not starting proceedings until €200K owed.

It appears many of the owners of, yet to correct, property assets - may not even be making payments, but there is some back-office deal with banks to give them a payment holiday for a while.

[interestrateripoff]

I've a suspicion this is a scandal yet to explode - especially in Europe.

I may have misunderstood, but I thought I read something recently about Spain or Greece not starting proceedings until €200K owed.

It appears many of the owners of, yet to correct, property assets - may not even be making payments, but there is some back-office deal with banks to give them a payment holiday for a while.

If that's true how long would it take someone to run up €200K in arrears!

[The Knimbies who say No]

makes you wonder what rates actually mean for people who are hopelessly behind. Are these people sensitive to rates at all?

Still, these figs are at odds with BoE ones a while ago which suggested 8% in 'some sort of forebearance'.

Either way, it's a small fraction of households and using their plight as cover to shaft many more with ZIRP is pretty poor firm.

[Quicken]

I'd like a breakdown of the figures about where in the UK these 42k are.

Still at least that extra £151 will be useful for meeting higher energy and food bills... I wonder what the modelists are seeing when they increase rates how many of those currently not in trouble will end up in default?

I'd like to know how many of these 'families' are hardworking. Clearly those special flowers need protection.

[Bloo Loo]

Of course, somebody IS paying for these arrears, these low rates and the clever BTL landlords to keep buying costs below rental income.

Savers are...Pensioners are, Capitalists expecting returns are.

Capital is being destroyed to keep the cash flowing and malinvestors voting Tory.

Some day, the bill will be being paid by the majority rather than the minority today, as these clever borrowers find they have no jobs, people cant pay the rents and the pension wont buy the food you need.

For someone to have forebearance, someone else isnt getting some income....and by someone else, I mean a real person, someone who has to live on their saved wealth. Meanwhile, people with good jobs, overpaid jobs kept going by this sacrifice of someone elses wealth, can borrow to their hearts content.

Low rates suit the entitled perfectly.

[interestrateripoff]

I'd like to know how many of these 'families' are hardworking. Clearly those special flowers need protection.

I'm guessing currently none as otherwise they wouldn't be in arrears?

42k politically may not be seen as an issue, if the number was 420k maybe then it would be hard working families face eviction.

[Oliver Sutton]

IIRC Once people get 3 months in arrears they are almost guaranteed to default.

[Billy soy]

Fvck the lot of them. They gambled and lost and so did the banks lending to them.

Half a dozen banks and 200,000 plonkers holding the rest of the country hostage, it would be funny if it were not so tragic.

[fluffy666]

We've got a budget deficit of ~7% and a current account deficit heading towards 5%.

The cost of credit - rather the BoE a base rates - will be determined off these shores, not within them.

As long as the government/BoE can print the deficit this is not strictly true.

[Quicken]

As long as the government/BoE can print the deficit this is not strictly true.

There are still some external creditors. Currency crisis ahead if they abandon the casino.

[goldbug9999]

Yes.....but also whose responsibility will it be to house the repossessed, homeless families.......is it better and more cost effective to keep them living paying nominal interest payments than having to find private rented accommodation for the tax payers to pay high rents for....it also helps keeps the value under wraps thus protecting the lenders assets.

So how does net homlessness increase given that no houses actually get knocked down ?.

[Bloo Loo]

As long as the government/BoE can print the deficit this is not strictly true.

You cant print wealth...when is anyone going to understand this?

[winkie]

So how does net homlessness increase given that no houses actually get knocked down ?.

....the number of houses is not the whole picture.....houses vary in size, some are converted into small units, some are empty some are full and some half used.....some are cheap some expensive.....some rents are low, some rents are expensive....bed and breakfast studio can cost £800 a month but the interest payments on a family house worth £350,000 with mortgage outstanding of £200,000 could be that or less...roll the debt over, add it on.

Edited November 15, 2013 by winkie

[Sancho Panza]

Didn't realize you could have a year's arrears and still be in the house..

But it's a reminder for those who think that IRs will go up anytime before the election.

Government backed forbearance perhaps.

Zombie Government supporting Zombie Banks supporting Zombie Households.

We are living through the decade of the living dead.

It's worth considering this report from Honest EA back in 2012 addressing these issues.

Repossessions are on the increase again. Been steadily increasing all year but last 3 months have been more noticeable. A couple of unusual situations where the repossessed property has been valued by the Estate agent and a couple of surveyors , placed on the market at a realistic figure to sell , only to be quickly withdrawn by the asset manager and repriced HIGHER???? Reason cited , case is too high loss , client (mortgagee) is insisting on marketing for a higher (unrealistic) figure. Never seen this in over 20 years. The public in denial I can accept and to some extent deal with , but mortgage lenders? What on earth are they playing at. All this will serve to do is create an even bigger loss for the mortgagor when the properties stagnate , they chase the market down and eventually sell for even less. Moral hazard in evidence hugely. Have 100K equity but miss 2 mortgage payments, cue start of possession proceedings. Up to your eyeballs with 100% mortgage which is now a 120% mortgage, no problem , pay us a quid a morth and we will class the loan as "underperforming" . I remain convinced that they will eventually foreclose on such people but only when the banks have recapitalized enough to bear the losses which could easily take years. So unfair on people who have been prudent and tried to live within their means but I guess its a sign of our times.

The leasehold market is in a disastrous state as many here predicted. Massive oversupply , eye watering negative equity in many cases with loads on the market at a "cover my outstanding mortgage" price which bears little resemblence to actual selling prices. Very few completed sales. Most agents have a few of these. Unfortunately many were bought by Yuppies (showing my age here) and these have lived in the posh flat for 5 years and now want to move up to a house /start a family except they cannot afford to take the loss so end up dumping the flat on the rental market and entering the swelling ranks of the reluctant landlord. This constricts their purchasing power in the residential market so demand for 2nd teir properties is suffering accordingly. 2 bed flats sold at the peak at 175K struggling to get 125K if they are lucky.

Slightly more realism from many sellers at valuation stage appearing to be at least prepared to consider that the party of ever increasing houses prices may be over for a considerable period of time. Not always prepared however to countenance actual nominal falls when it is applied to their individual property but it is a step in the right direction compared to 12 months ago. My job is sometimes one of public education as many people instictively feel the market is not right but are not able to make the link between their obviously declining disposable income/falling living standards and unsustainable high house prices (and rents). Many of the powerful arguments employed on this website have been very useful to me when challenging entrenched attitudes, since if I can make a reasoned argument for a more competitive price I will actually sell the house if they accept my recommendation.

Structural flaw in the market becoming ever more apparent. 80% of our valuation requests are from people wishing to downsize. This is simply not sustainable. 80% trading down means only 20% trading up. Simple mathematics tells you this cannot end well. Creeping oversupply starting to build in the mid range and higher end properties. More Country Homes (500K upwards to 2M) have come onto the market in Kent every month this year than have been sold each month by all the agents collectively. Occasional distressed seller starting to appear even at this level. 50K price reduction minimum required to stimulate any fresh interest if sellers are demanding a quick sale. 80% of buyers registering are claiming to be pure cash , cash from sale ( downsizers) or very modest LTV mortgage requirements.

Mortgage lending criteria is becoming ever tighter in the real world despite government suggestions to the contrary. Mortgage brokering is almost non existant in the traditional sense of shopping around on behalf of the client to get them the best deal. Most applicants fit the criteria for 1 or 2 lenders at best , if the computer says no then thats it. You dont really need a mortgage broker to look at 2 lenders, however all the skill now is in knowing which of the 2 possible lenders to approach first and how to present the case in a way that will get through all the underwritng hoops. Even people with reasonable deposits are being asked for more money to access the best interest rates . Its mortgage rationing in all but name, with a presumption to find reasons not to lend rather than a competitive market to attract more custom as was the case pre crash. This is clearly putting downward pressure on prices.

Edited November 15, 2013 by Sancho Panza

[slacker]

More Country Homes (500K upwards to 2M) have come onto the market in Kent every month this year than have been sold each month by all the agents collectively

This is a phenomenon round here too - hardly any ever sell, some have been on market 5 years+.

Intermittent London downsizers (in value but upsizing in square feet) buying with cash gives hope to all the others that they'll get "what it's worth".

It's caused by lack of any statistical visibility and people with cognitive biases extrapolating based on outlier data (e.g. a 4-bed house sells for 400K cash, therefore all 4-bed must be worth 450K - even though 98% of others were sold around 250K and only 5% of 4-bed on market have sold in last 3 months ...)

Baffles me how I can have pages of granular statistics at work to save a quid on buying some widgets, but when it comes to a personal financial decision that will affect me for years I've got little more than a few VI press releases and what Dave down the pub thinks is happening.

[TwoWolves]

Fvck the lot of them. They gambled and lost and so did the banks lending to them.

Half a dozen banks and 200,000 plonkers holding the rest of the country hostage, it would be funny if it were not so tragic.

Spot on. This is however the neoliberal mind set, much like "no child left behind" the majority and hardworking sacrificed to a minority interest.

Truth is everyone will benefit from a correction but there will be pain in getting there.

[bendy]

You cant print wealth...when is anyone going to understand this?

Of course you can.

There is £100 in the country - you have £50 and I have £50 but I have the power to print. I print £900 and give it to myself.

You did have 50% wealth, and me, you now have 5% and I have 95%!

Of course it's a lot more marginal than that re inflationary factors, real production and assets, but it's all slowly slowly going back to serfdom.

[shindigger]

We've got a budget deficit of ~7% and a current account deficit heading towards 5%.

The cost of credit - rather the BoE a base rates - will be determined off these shores, not within them.

Vote Labour.

Its the only HPC "weapon" left.

[shindigger]

Dont forget all the I/O merchants out there.

My friend and his missus have borrowed a combined £300k+ on I/O on 2 properties.

No scheme in place, and no plan to pay back.

Tick tock.