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Outstanding Mortgages Hits All-Time High In The UK

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Some interesting stats and sentiment in this article.. 

http://www.voice-online.co.uk/article/outstanding-mortgages-hits-all-time-high-uk

The average outstanding mortgage in the UK stood at an eye-watering £121,678 for August 2017
17/10/2017 08:00 PM
 

CONTINUED GROWTH in house prices, along with a small decline in the number of outstanding home loans has led to the highest level of mortgage debt per household ever recorded.

The October Money Statistics, produced by the Money Charity, have revealed that the average outstanding mortgage in the UK stood at an eye-watering £121,678 for the month of August, in 2017.

This has increased on 2013, when the figure stood at £109,487, and is the first year where the average balance on mortgages has been pushed over £120,000.

Driven by ever-increasing house prices, it is also fed by longer and longer mortgages repayment periods and larger loans – the amount of 35-year mortgage terms has increased from 2.7% in 2005 to 15% in 2017.

Furthermore, as wages stagnate in real terms, the average first time buyer is borrowing 3.63 times their income. Therefore, with outstanding mortgage debt rising to new levels, and higher interest rates predicted in the next month, it could become harder for households to pay off such mortgages.

However, the amount of mortgage accounts with arrears has remained largely unchanged, and payments due for loans in arrears have continued to increase over the past year. This is a knock-on effect from continued low interest rates.

Steph Hayter, Acting Chief Executive of The Money Charity says: “The rising amount we owe on mortgages should be a concern to all of us. As interest rates seem likely to rise, people may soon begin to feel the effects on their wallets.”

“Those with large outstanding debts, especially people with variable rate mortgages, should prepare for a time in the near future where monthly repayments will be higher.”

Other key points from the October Money Statistics include:

- The savings ratio recovered up to 5.9% in Q2 2017, up from 1.9% in the previous quarter, according to the Office for National Statistics.

- Outstanding consumer credit per adult has increased by £369 in the month of August 2017.

- 35% of households are believed to have no savings whatsoever in the UK.

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high house prices GOOD

high house price DEBT?

 

join the dots plebs, but not before you've looked over... THERE! Wassat? Its a shiny thing/scary thing/sexy thing/ something you want/need/can't live without

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Surprised its so low. Testament to the low volumes that have shifted over the last few years.

On a short holiday visiting family - Just been out for a walk this morning in an oxford commuter town and across a number of estate agent windows i saw one flat under £300k and a handful of small 2 bed houses between £300k and £400k. 

My mum and dad had a mortgage for 40 years, with several MEWs for an extension and a bathroom. Lots of handwringing over the mortgage payments esp when rates were high. But my parents never at any time had a mortgage over £20K. They never really made a dent in it and ultimately cleared the mortgage finally with a 25% pension lump sum. Must be loads of older people in a similar position really making up the base of that pyramid. 

 

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Also surprised it's so low. £121k doesn't sound very much if the average house price is £200k+.

I guess if we assume that on average people are halfway through paying theirs off, then it makes a bit more sense...

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13 hours ago, hp72 said:
Driven by ever-increasing house prices, it is also fed by longer and longer mortgages repayment periods and larger loans – the amount of 35-year mortgage terms has increased from 2.7% in 2005 to 15% in 2017.

So the toothless MMR, having no maximum mortgage term, is merely extending it until the computer says 'Yes'?

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14 minutes ago, Craig_ said:

Also surprised it's so low. £121k doesn't sound very much if the average house price is £200k+.

I guess if we assume that on average people are halfway through paying theirs off, then it makes a bit more sense...

Don't forget about the deferred Help to Buy Bail Banks debt. The 40% in London and 20% in the regions won't count as mortgage debt will it? It's an equity loan.

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18 minutes ago, Craig_ said:

Also surprised it's so low. £121k doesn't sound very much if the average house price is £200k+.

I guess if we assume that on average people are halfway through paying theirs off, then it makes a bit more sense...

The debt will be proportional to the house value and it’ll be higher lower down the chain. Most houses over £250,000 are mortgage free to the odd mega mortgage self-cert here and there will only add a statistically blip. 

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So average mortgage is just under 125k 

According to this 

http://www.tsb.co.uk/news-releases/tsb-is-getting-britain-ready-for-rate-rise/

According to this a rate rise at that point would amount to a whopping £16 monthly rise ...my rent when up double that this year so I fail to see why homeowners are being so protected.If a 16 quid a month rise is going to wipe people out then the country is screwed anyway 

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Two things here...1. the number of outstanding mortgages.   2. the amount or average amount of outstanding mortgages.

There are many reasons why someone might not wish to repay their mortgage in full even if they could, say leave an outstanding balance of less than a thousand pounds IO.....I would guess there are many mortgages like this, but still on stats as an outstanding mortgage....not that different to the thousands of bank accounts with less than ten pounds in them.;)

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7 hours ago, Democorruptcy said:

So the toothless MMR, having no maximum mortgage term, is merely extending it until the computer says 'Yes'?

MMR is not toothless. 

Pre-MMR lending could be interest-only which means an infinite term and there was no need to provide any proof of earnings to your lender hence any credit underwriting was meaningless. If you declared that your income from dog-walking was £100k per annum then you could borrow as if your income was £100k per annum.

It's perfectly reasonable to argue that MMR would be tighter if there had been a restriction to 25 year terms. It's fatuous to suggest that it is toothless because it doesn't. Repeatedly insisting that MMR is toothless is beyond fatuous.

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7 hours ago, Democorruptcy said:

Don't forget about the deferred Help to Buy Bail Banks debt. The 40% in London and 20% in the regions won't count as mortgage debt will it? It's an equity loan.

As of the Treasury's latest release (data to 30 June 2017, released 28 September 2017) there are £6.72bn worth of equity loans outstanding. Outstanding mortgages on the books of the CML lenders amount to £1,300bn. HTB equity loan are equal to  0.5% of the stock of existing mortgages. They are a rounding error.

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This is very good for an economy that deals in debt I'm sure there's huge potential to increase this level of debt. Increasing the length of loans provides security of income for debt selling companies for decades into the future. On this basis the economy is extremely well placed for growth in the medium to long term. I'm sure the ingenuity and resilience of the British worker will win through to find ways to pay the interest.

If we ensure house prices rise for ever, they can even remortgage and use the money to pay interest on the old and new loans.

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  • 293 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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