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Shrinking Savings Put Millions At Risk Of Repossession/15 Mn Working Adults Have No Savings

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i 14/4/14

'Millions of families are in such a perilous financial state that they are just one pay cheque away from losing their home, research shows. Nearly four million families who pay rent or a mortgage have so few savings that it would take only a month’s missed salary to lose their home, YouGov polling for Shelter reveals. Of these, 2.4 million have no savings whatsoever and would not be able to survive a full month.

The findings come amid fears that a housing bubble stoked by the Government’s Help to Buy scheme could leave new home owners with a precarious financial future.

Help to Buy guarantees up to 95 per cent of a mortgage, but if a housing bubble bursts it could leave people with negative equity, where their debt is greater than the value of their home.

Earlier this month Vince Cable warned that the bubble developing in the housing market could be more serious than during the last property crash.

Research by Rightmove has found that asking prices have lifted to record highs for two months in a row amid a “ridiculously tight” supply of homes in many areas of the South.

Asking prices hit a new peak of £262,594 in April across England and Wales, which is 7.3 per cent higher than a year ago, marking the fastest annual rate of increase since October 2007.

According to the latest government figures, 15 million working age adults in the UK have no savings at all, meaning that families who stretched themselves financially to get on the housing ladder could put their homes at risk.

The shadow Housing Minister, Emma Reynolds, said: “These figures demonstrate the cost-of-living crisis facing millions of families up and down the country.

“While this out-of-touch Government tries to claim everything is going well, working people are on average £1,600 a year worse off since the last election and millions of families worry about losing their homes.”

Savers withdrew money from their accounts last year at the fastest rate for nearly four decades, according to Bank of England figures. Britons took £23bn out of long-term savings in 2013.

Tom, 48, a successful businessman as a founding partner in a large independent furniture retailer in the West Country, was one of thousands to have his home repossessed this month. The married father-of-two, who did not want his real name used, thought his story should be told to show others how easily it could happen.

His company was taken over, and in 2011 he lost his job. Unemployment meant the family quickly built up mortgage arrears, and he suffered a nervous breakdown and severe depression. Efforts to sell the house over the past year were unsuccessful, and it has been repossessed. The family will now have to rent.

Campbell Robb, the chief executive of Shelter, said: “No matter how hard ordinary families work, in today’s ‘knife-edge nation’ any drop in income can all too quickly put their home at serious risk. The Government must make sure the safety net is strong enough to stop families falling through the gaps, and going through the tragedy of losing their homes.”

One in 400 mortgaged homes was repossessed last year, with 28,900 properties seized, according to the latest figures from the Council of Mortgage Lenders. Repossessions have been falling since the most recent peak of 48,900 in 2009, but experts worry that the numbers could creep up again as bills eat away at the last of people’s savings.

Earlier this month, the Business Secretary, Vince Cable, warned: “The fundamental problem is a chronic imbalance between supply and demand. A recovering mortgage market is just fuelling demand again.”

Liz Clare, who works as an adviser on Shelter’s housing helpline, said: “This research highlights the financial knife-edge that millions of us now find ourselves on – living month to month, pay cheque to pay cheque. Every day we see the proof that just one piece of bad luck, like a sudden job loss or illness, could tip any of us into a spiral that puts the family home at risk.”

A Department for Communities and Local Government spokesman said: “We are helping keep down both interest rates and the number of repossessions and have maintained some of the strongest protections in the world to guard families against homelessness.”'

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i 14/4/14

'Millions of families are in such a perilous financial state that they are just one pay cheque away from losing their home, research shows. Nearly four million families who pay rent or a mortgage have so few savings that it would take only a month’s missed salary to lose their home, YouGov polling for Shelter reveals. Of these, 2.4 million have no savings whatsoever and would not be able to survive a full month.

The findings come amid fears that a housing bubble stoked by the Government’s Help to Buy scheme could leave new home owners with a precarious financial future.

Help to Buy guarantees up to 95 per cent of a mortgage, but if a housing bubble bursts it could leave people with negative equity, where their debt is greater than the value of their home.

Earlier this month Vince Cable warned that the bubble developing in the housing market could be more serious than during the last property crash.

Research by Rightmove has found that asking prices have lifted to record highs for two months in a row amid a “ridiculously tight” supply of homes in many areas of the South.

Asking prices hit a new peak of £262,594 in April across England and Wales, which is 7.3 per cent higher than a year ago, marking the fastest annual rate of increase since October 2007.

According to the latest government figures, 15 million working age adults in the UK have no savings at all, meaning that families who stretched themselves financially to get on the housing ladder could put their homes at risk.

The shadow Housing Minister, Emma Reynolds, said: “These figures demonstrate the cost-of-living crisis facing millions of families up and down the country.

“While this out-of-touch Government tries to claim everything is going well, working people are on average £1,600 a year worse off since the last election and millions of families worry about losing their homes.”

Savers withdrew money from their accounts last year at the fastest rate for nearly four decades, according to Bank of England figures. Britons took £23bn out of long-term savings in 2013.

Tom, 48, a successful businessman as a founding partner in a large independent furniture retailer in the West Country, was one of thousands to have his home repossessed this month. The married father-of-two, who did not want his real name used, thought his story should be told to show others how easily it could happen.

His company was taken over, and in 2011 he lost his job. Unemployment meant the family quickly built up mortgage arrears, and he suffered a nervous breakdown and severe depression. Efforts to sell the house over the past year were unsuccessful, and it has been repossessed. The family will now have to rent.

Campbell Robb, the chief executive of Shelter, said: “No matter how hard ordinary families work, in today’s ‘knife-edge nation’ any drop in income can all too quickly put their home at serious risk. The Government must make sure the safety net is strong enough to stop families falling through the gaps, and going through the tragedy of losing their homes.”

One in 400 mortgaged homes was repossessed last year, with 28,900 properties seized, according to the latest figures from the Council of Mortgage Lenders. Repossessions have been falling since the most recent peak of 48,900 in 2009, but experts worry that the numbers could creep up again as bills eat away at the last of people’s savings.

Earlier this month, the Business Secretary, Vince Cable, warned: “The fundamental problem is a chronic imbalance between supply and demand. A recovering mortgage market is just fuelling demand again.”

Liz Clare, who works as an adviser on Shelter’s housing helpline, said: “This research highlights the financial knife-edge that millions of us now find ourselves on – living month to month, pay cheque to pay cheque. Every day we see the proof that just one piece of bad luck, like a sudden job loss or illness, could tip any of us into a spiral that puts the family home at risk.”

A Department for Communities and Local Government spokesman said: “We are helping keep down both interest rates and the number of repossessions and have maintained some of the strongest protections in the world to guard families against homelessness.”'

George is banking on a 20 point rise in personal debt/income levels across all households to drive his 8% y-o-y increase in business investment over the next 6 years and give the UK the resultant GDP boost.

Labour are on a sticky wicket, Help to Buy fundamentally appeals to them, here's Reynolds last month:

Response to updated Help to Buy figures - Emma Reynolds

EmmaReynoldsMP, Labour’s Shadow Housing Minister, responding to updated Help to Buy figures, said:

"Any help for first time buyers struggling to get on the property ladder is to be welcomed. But rising demand for housing must be matched with rising supply if this scheme is to bring the cost of housing within the reach of low and middle-income earners.

"Instead, under this government house building fell to its lowest level in peacetime since the 1920s and home ownership continues to fall.

"You can’t deal with the cost-of-living crisis without building more homes. We need a Help to Build policy to boost housing supply and tackle the cost-of-living crisis, alongside a reformed Help to Buy scheme. That’s why Labour has committed to getting at least 200,000 homes built a year by 2020.”

http://press.labour.org.uk/post/80444683728/response-to-updated-help-to-buy-figures-emma-reynolds

:rolleyes:

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Labour should be looking at reducing the cost of house building.

A fairly straight forward process to et a report form a surveyor then seing how the costs could be easily reduced.

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Labour should be looking at reducing the cost of house building.

A fairly straight forward process to et a report form a surveyor then seing how the costs could be easily reduced.

they could reduce the attractiveness of the modern estate...make the garages smaller, the gardens smaller, the roads park walk, the styling plain and utilitarian....

wut?...they already dun that?

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I was at a party a few weeks back where several middle class professionals were saying that they have about 50 quid left over after bills each month.

I've had similar conversations where the number was £100. Many apparently comfortable people are living very close to the edge.

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George is banking on a 20 point rise in personal debt/income levels across all households to drive his 8% y-o-y increase in business investment over the next 6 years and give the UK the resultant GDP boost.

Labour are on a sticky wicket, Help to Buy fundamentally appeals to them, here's Reynolds last month:

:rolleyes:

Unless they see a sustained increase in demand businesses will neither invest or seek to reward their employees, see Japan.

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I was atempting to arrange a lads weekend earlier in the year. When booking time came it turned out that most people (childless bank-renters) could not afford £60 for the B&B.

It will be interesting to watch interest rates spike up. I'a already happing in New Zealand, China, and BRICS nations.

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There have been stories like this since 2008. Many people are on the edge, even in the boom times, because they spend nearly everything they earn. When their income no longer stretches that far, then they learn to cut something out, ie, the gym membership goes, shopping at Tesco instead of Waitrose etc.

Some balance is required here to clarify spending on what people need to live and what people want to have. There is a huge scope to cut back the latter in many people's lifestyles still, so I'm sure we'll have many such more articles like this as people continue to discover what they really can and can't do without.

When everyone is car pooling or riding a bike to get to work, only buying clothes from charity shops and shopping at Aldi, then I'll start to believe headlines like this.

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Not just a case of people stretching themselves to buy the house they need, but in many cases stretching themselves for the executive house they don't need. A culture that you can't go wrong with houses and you gear yourself for the most expensive house lending criteria will allow.

Edited by crashmonitor

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When everyone is car pooling or riding a bike to get to work, only buying clothes from charity shops and shopping at Aldi, then I'll start to believe headlines like this.

Yes, since 2008. Time over these stories. It may have been this way for many a year too. Brother did one seat in Family Law as a trainee in 2005, and saw financial records of a few couples divorcing. Nice houses big mortgages cars on HP, very little by way of assets or savings.

And also, I don't care about these non-saver spenders. If that's how they want to live that's up to them. Were enough of them tilt into difficulty, perhaps they can bring down house prices and/or rents. Car pooling? April 2014: UK new car registrations hit highest in a decade

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Savers withdrew money from their accounts last year at the fastest rate for nearly four decades, according to Bank of England figures. Britons took £23bn out of long-term savings in 2013.

I don't believe that figure is primarily driven by large numbers of long-term savers forced to dip into their reserves. I suspect that as boomers begin to withdraw their long-term savings, that money is not being matched by 20 or 30-somethings starting to save in similar proportions. The result is a decline in overall long-term saving. There's a whole host of very obvious reasons for why the young aren't saving and that suggests a far more fundamental shift going on than some short-term belt tightening. The implications for things like saving for the deposit on a house and servicing a mortgage are pretty obvious too. Even with HTB, the next generation simply cannot afford to pay the current cost of home ownership. End of.

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Tom, 48, a successful businessman as a founding partner in a large independent furniture retailer in the West Country, was one of thousands to have his home repossessed this month.

I see a contradiction there.

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Tom, 48, a successful businessman as a founding partner in a large independent furniture retailer in the West Country, was one of thousands to have his home repossessed this month.

I see a contradiction there.

One hopes he wasn't in charge of financial planning at the West Country furniture retailer.

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One hopes he wasn't in charge of financial planning at the West Country furniture retailer.

You can grow a business, pay millions in tax for every step, and lose it all because one customer defaults - and not get a penny for your efforts.

Or you can leverage a few grand a million times, buy rental properties, rince/repeat, contribute nothing, employ nobody, pay very little tax.

Tom probably worked really hard and had the deck stacked against him since the day he started.

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I thought people could get housing benefit for several months to cover their mortgage if they lost their job?

Surely this gives them a few months.

Apples are not oranges.

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Mate of mine lost his job (5 years back), losing £600 a month as a couple. Along with stooging £20k (0% credit cards), plus 20k debt from the wedding, and a 138k mortgage 115% LTV. Did he learn his lesson, nope last year he borrowed a further 100-160k + inheritance and got a 4 bed. Now wife has a baby on the way.

At least when I lost my job a few years back I could sleep at night.

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I don't believe that figure is primarily driven by large numbers of long-term savers forced to dip into their reserves. I suspect that as boomers begin to withdraw their long-term savings, that money is not being matched by 20 or 30-somethings starting to save in similar proportions. The result is a decline in overall long-term saving. There's a whole host of very obvious reasons for why the young aren't saving and that suggests a far more fundamental shift going on than some short-term belt tightening. The implications for things like saving for the deposit on a house and servicing a mortgage are pretty obvious too. Even with HTB, the next generation simply cannot afford to pay the current cost of home ownership. End of.

Or, it's just a reflection that savings rates are cr*p and people have shifted their money elsewhere (BTL for example).

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Unless they see a sustained increase in demand businesses will neither invest or seek to reward their employees, see Japan.

This is the rub.

Full pager in my local rag, a small cul de sac of new 4 bed detached homes on a poorer part of the Wirral (Neston). "Great value at £499,995".

The buyers of those will have plenty left over for fueling their Bentley, Michelin starred dining etc.

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Yes, since 2008. Time over these stories. It may have been this way for many a year too. Brother did one seat in Family Law as a trainee in 2005, and saw financial records of a few couples divorcing. Nice houses big mortgages cars on HP, very little by way of assets or savings.

And also, I don't care about these non-saver spenders. If that's how they want to live that's up to them. Were enough of them tilt into difficulty, perhaps they can bring down house prices and/or rents. Car pooling? April 2014: UK new car registrations hit highest in a decade

Problem is, you may not care about these people but you share the same economy and banking system with them..

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Mate of mine lost his job (5 years back), losing £600 a month as a couple. Along with stooging £20k (0% credit cards), plus 20k debt from the wedding, and a 138k mortgage 115% LTV. Did he learn his lesson, nope last year he borrowed a further 100-160k + inheritance and got a 4 bed. Now wife has a baby on the way.

At least when I lost my job a few years back I could sleep at night.

And, of course, have a lie in every morning!

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Unless they see a sustained increase in demand businesses will neither invest or seek to reward their employees, see Japan.

I was speaking to a small manufacturer at the w/e and he was telling me that he'd not given his lads a pay rise in 7/8 years.They've had the odd bonus when things have gone well.Variety of reasons but the crucial thing for him is that none have left his employ because noone else in their industry is paying much more.

Diifficult times for the 99%.

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