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Huge Increase In Those Forced To Default On Mortgages Payments

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Sorry if this is already posted.... I can't see it. But I do wear glasses!

http://www.iraq-war.ru/article/134447

Huge increase in those forced to default on mortgages payments

Buyers are being forced to borrow record amounts of money to finance their property purchases

Number of people defaulting on their payments this year has doubled to 77,000 each month

Fears are growing of a dramatic increase in the number of houses that are repossessed

By Martin Hickman, Consumer Affairs Correspondent

Published: 11 July 2007

Britain faces a mortgage crisis with payment arrears rising sharply as 18 million homeowners struggle to meet the fifth rise in interest rates in less than a year.

It is being predicted that high earners who have stretched themselves to buy a home will join less prosperous social groups in experiencing problems as they juggle finances to adjust to rises in monthly payments.

Research suggests that twice as many borrowers as last year have missed mortgage payments in the past six months. A website, MoneyExpert.com said that, while 36,000 borrowers a month fell into arrears last year, this year that figure will be 77,000.

Fears that homeowners are vulnerable to rate rises intensified when the Council of Mortgage Lenders (CML) said yesterday that first-time buyers were borrowing a record 3.37 times their income and other buyers just over three times.

A spokesman for the CML said it was revising upwards its forecast of 18,000 repossessions this year. The two million people whose fixed-rate deals will come to an end in the coming 18 months are expected to endure the most pain. "There's a big squeeze coming up. Not because interest rates are particularly high but because of the pace of the rises in the past six months, which will catch people on the hop," the CML said.

Although treble what they were three years ago, repossessions are a quarter of the rate they were at their peak of 75,000 in 1991 when millions of people found themselves in negative equity - with properties worth less than their mortgages. But a time lag means that it may be several months before the true scale of problems emerges in 2007 and 2008.

"We are a long way from the dark days of the late 1980s and early 1990s when more than a million people lost their homes, but many are feeling the strain," said Sean Gardner, chief executive of MoneyExpert.com, which surveyed 2,000 people about their mortgage problems.

"Anyone who has missed a mortgage payment should, for a start, be talking to their lender and letting them know what is going on. They should also look to cut spending and reduce debt across the board. That ought to mean sorting out their finances and getting all loans and credit cards under control," he said.

The Bank of England raised rates a quarter of one per cent to a six-year high of 5.75 per cent on Thursday, leaving someone with a £200,000 repayment mortgage having to find £165 more a month than last summer.

In Gordon Brown's new Cabinet, ministers discussed plans to move more people on to the property ladder as the Prime Minister signalled that tackling the mismatch between housing supply and demand was a priority for his new administration.

House prices have trebled to an average of £184,070 since Labour entered Downing Street in 1997, giving millions of existing homeowners surges in their personal wealth. As prices have risen, buyers have pushed themselves to the brink to get on the property ladder. A monthly survey by Spicerheart Financial Services found that the proportion of borrowers taking out mortgages of 95 per cent or more of the value of the property doubled from 9 per cent to 19 per cent between January and June.

A report today from the market analyst Datamonitor predicts that "sub-prime" mortgages will increase by 5 per cent a year until 2011, offered to people with previous defaults. Maya Imberg, the author of the report, warned that the banking system should be wary. "Despite the argument that they have sophisticated underwriting models in place, UK sub-prime lenders should take the US sub-prime mortgage crisis as a warning and ensure they are not over-exposing themselves to highly risky loans," she said.

Each time the Bank of England increases rates by a quarter point - which it did in August and November last year and in January, May and July this year - £33 a month is added to a £200,000 repayment mortgage. Yesterday, Oliver Gilmartin, of the Royal Institute of Chartered Surveyors, said first-time buyers should not assume rates were at the top of the cycle and they could "move higher for longer than currently expected". More than half of the economists in a poll by Reuters expect rates to hit 6 per cent in 2007.

The Consumer Credit Counselling Service said high earners were spending far more of their income on housing costs, up from 33 per cent in 2003 to 44 per cent in the first four months of 2007.

To improve affordability, the Government is planning to announce a scheme to offer special, fixed-term mortgages to first-time buyers. The scheme is likely to be tailored to offer shared-equity schemes where buyers purchase a stake in their property while renting it from social landlords. Local authorities will also offer more land for affordable housing. "This is an incredibly market- sensitive area," said the Prime Minister's official spokesman.

'It's a lot of money to come up with'

Ruth Davey, 37, single mother and part-time worker

Ms Davey, a freelance project manager in arts and environmental ventures, may have to find a lodger after her mortgage payments rose by 25 per cent in 10 months.

She took out a £70,000 mortgage five years ago to buy a house in Bristol. "At the time I was earning a lot more than I do now so I was able to cope with the payments," she says. "Then, two years ago I was made redundant, by which stage I was already a single mum."

She moved last September to Stroud in search of a quieter environment in which to bring up her four year-old son. She sought financial advice and took out a £404-a-month interest-only mortgage with Standard Life to buy a £143,000 two-bedroom house. But her payments have soared to £525 a month. "It's a lot of money for a single mum to come up with, especially as I only work part time," she says. "I've worked very hard since I left university but when my son was born I took the decision to spend time with him before he started school. As a result my earnings are very low.

"I know I took a risk with my mortgage," she says. "When you take out a variable rate plan you expect things to fluctuate but now I'm wondering when it's going to stop."

Laura Pitel

LINK

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Sorry if this is already posted.... I can't see it. But I do wear glasses!

http://www.iraq-war.ru/article/134447

Huge increase in those forced to default on mortgages payments

Buyers are being forced to borrow record amounts of money to finance their property purchases

Number of people defaulting on their payments this year has doubled to 77,000 each month

Fears are growing of a dramatic increase in the number of houses that are repossessed

By Martin Hickman, Consumer Affairs Correspondent

Published: 11 July 2007

Britain faces a mortgage crisis with payment arrears rising sharply as 18 million homeowners struggle to meet the fifth rise in interest rates in less than a year.

It is being predicted that high earners who have stretched themselves to buy a home will join less prosperous social groups in experiencing problems as they juggle finances to adjust to rises in monthly payments.

Research suggests that twice as many borrowers as last year have missed mortgage payments in the past six months. A website, MoneyExpert.com said that, while 36,000 borrowers a month fell into arrears last year, this year that figure will be 77,000.

Fears that homeowners are vulnerable to rate rises intensified when the Council of Mortgage Lenders (CML) said yesterday that first-time buyers were borrowing a record 3.37 times their income and other buyers just over three times.

A spokesman for the CML said it was revising upwards its forecast of 18,000 repossessions this year. The two million people whose fixed-rate deals will come to an end in the coming 18 months are expected to endure the most pain. "There's a big squeeze coming up. Not because interest rates are particularly high but because of the pace of the rises in the past six months, which will catch people on the hop," the CML said.

Although treble what they were three years ago, repossessions are a quarter of the rate they were at their peak of 75,000 in 1991 when millions of people found themselves in negative equity - with properties worth less than their mortgages. But a time lag means that it may be several months before the true scale of problems emerges in 2007 and 2008.

"We are a long way from the dark days of the late 1980s and early 1990s when more than a million people lost their homes, but many are feeling the strain," said Sean Gardner, chief executive of MoneyExpert.com, which surveyed 2,000 people about their mortgage problems.

"Anyone who has missed a mortgage payment should, for a start, be talking to their lender and letting them know what is going on. They should also look to cut spending and reduce debt across the board. That ought to mean sorting out their finances and getting all loans and credit cards under control," he said.

The Bank of England raised rates a quarter of one per cent to a six-year high of 5.75 per cent on Thursday, leaving someone with a £200,000 repayment mortgage having to find £165 more a month than last summer.

In Gordon Brown's new Cabinet, ministers discussed plans to move more people on to the property ladder as the Prime Minister signalled that tackling the mismatch between housing supply and demand was a priority for his new administration.

House prices have trebled to an average of £184,070 since Labour entered Downing Street in 1997, giving millions of existing homeowners surges in their personal wealth. As prices have risen, buyers have pushed themselves to the brink to get on the property ladder. A monthly survey by Spicerheart Financial Services found that the proportion of borrowers taking out mortgages of 95 per cent or more of the value of the property doubled from 9 per cent to 19 per cent between January and June.

A report today from the market analyst Datamonitor predicts that "sub-prime" mortgages will increase by 5 per cent a year until 2011, offered to people with previous defaults. Maya Imberg, the author of the report, warned that the banking system should be wary. "Despite the argument that they have sophisticated underwriting models in place, UK sub-prime lenders should take the US sub-prime mortgage crisis as a warning and ensure they are not over-exposing themselves to highly risky loans," she said.

Each time the Bank of England increases rates by a quarter point - which it did in August and November last year and in January, May and July this year - £33 a month is added to a £200,000 repayment mortgage. Yesterday, Oliver Gilmartin, of the Royal Institute of Chartered Surveyors, said first-time buyers should not assume rates were at the top of the cycle and they could "move higher for longer than currently expected". More than half of the economists in a poll by Reuters expect rates to hit 6 per cent in 2007.

The Consumer Credit Counselling Service said high earners were spending far more of their income on housing costs, up from 33 per cent in 2003 to 44 per cent in the first four months of 2007.

To improve affordability, the Government is planning to announce a scheme to offer special, fixed-term mortgages to first-time buyers. The scheme is likely to be tailored to offer shared-equity schemes where buyers purchase a stake in their property while renting it from social landlords. Local authorities will also offer more land for affordable housing. "This is an incredibly market- sensitive area," said the Prime Minister's official spokesman.

'It's a lot of money to come up with'

Ruth Davey, 37, single mother and part-time worker

Ms Davey, a freelance project manager in arts and environmental ventures, may have to find a lodger after her mortgage payments rose by 25 per cent in 10 months.

She took out a £70,000 mortgage five years ago to buy a house in Bristol. "At the time I was earning a lot more than I do now so I was able to cope with the payments," she says. "Then, two years ago I was made redundant, by which stage I was already a single mum."

She moved last September to Stroud in search of a quieter environment in which to bring up her four year-old son. She sought financial advice and took out a £404-a-month interest-only mortgage with Standard Life to buy a £143,000 two-bedroom house. But her payments have soared to £525 a month. "It's a lot of money for a single mum to come up with, especially as I only work part time," she says. "I've worked very hard since I left university but when my son was born I took the decision to spend time with him before he started school. As a result my earnings are very low.

"I know I took a risk with my mortgage," she says. "When you take out a variable rate plan you expect things to fluctuate but now I'm wondering when it's going to stop."

Laura Pitel

LINK

Shame, if only they had the foresight to take a fixed rate deal of 10 years or more.

Sheep, Herd, Fools, they are now going to repay their discounts back with the shirts on their backs.

Get in today, get a cheap fixed rate deal over 10, or even 25 years, then sit back and smoke Havannas!!!.

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Shame, if only they had the foresight to take a fixed rate deal of 10 years or more.

Sheep, Herd, Fools, they are now going to repay their discounts back with the shirts on their backs.

Get in today, get a cheap fixed rate deal over 10, or even 25 years, then sit back and smoke Havannas!!!.

They will be "Sheep, Herd, Fools" if they buy at todays prices. Regardless of the mortgage terms.

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She took out a £70,000 mortgage five years ago to buy a house in Bristol. "At the time I was earning a lot more than I do now so I was able to cope with the payments," she says. "Then, two years ago I was made redundant, by which stage I was already a single mum."

She moved last September to Stroud in search of a quieter environment in which to bring up her four year-old son. She sought financial advice and took out a £404-a-month interest-only mortgage with Standard Life to buy a £143,000 two-bedroom house. But her payments have soared to £525 a month. "It's a lot of money for a single mum to come up with, especially as I only work part time," she says. "I've worked very hard since I left university but when my son was born I took the decision to spend time with him before he started school. As a result my earnings are very low.

If that happens to you of course you are going to be in trouble. I would be astonished if you were not!!!

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Ms Davey, a freelance project manager in arts and environmental ventures, may have to find a lodger after her mortgage payments rose by 25 per cent in 10 months.

She took out a £70,000 mortgage five years ago to buy a house in Bristol. "At the time I was earning a lot more than I do now so I was able to cope with the payments," she says. "Then, two years ago I was made redundant, by which stage I was already a single mum."

She moved last September to Stroud in search of a quieter environment in which to bring up her four year-old son. She sought financial advice and took out a £404-a-month interest-only mortgage with Standard Life to buy a £143,000 two-bedroom house. But her payments have soared to £525 a month. "It's a lot of money for a single mum to come up with, especially as I only work part time," she says. "I've worked very hard since I left university but when my son was born I took the decision to spend time with him before he started school. As a result my earnings are very low.

"I know I took a risk with my mortgage," she says. "When you take out a variable rate plan you expect things to fluctuate but now I'm wondering when it's going to stop."

Wait a minute £525 per month IO would a be rate of 9% on £70,000 worth of borrowings. :blink:

A rate of 7.5% (normal SVR) would require borrowings of £84,000. Must be a tracker at say 6% which would be £105,000 of borrowings :blink:

Christ that's a large IO mortgage and not long left to pay it off before she retires (28 years).

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