45% Of All Mortgage Debt Borrowed Since 2004

[alabala]

http://www.equitypropertyportfolios.co.uk/...wales-18303856/

http://www.aboutproperty.co.uk/news/uk-pro...#036;479267.htm

45% of all mortgage debt borrowed since 2004

Interestingly, 45 per cent of all outstanding mortgage debt in England was held in mortgages starting after 2004.

This is partially explained by rising prices in the property market, but also due to longstanding mortgage holders remortgaging in recent years to release equity or simply take advantage of better deals.

The government also finds there are 242,000 households with second homes located in England and 36,000 households with a second property in Wales or Scotland.

A further 211,000 households had a second home outside the UK; of which 34 per cent were in Spain and 23 per cent were in France.

OMG....

Edited October 3, 2007 by alabala

[Confounded]

http://www.equitypropertyportfolios.co.uk/...wales-18303856/

http://www.aboutproperty.co.uk/news/uk-pro...#036;479267.htm

45% of all mortgage debt borrowed since 2004

OMG....

That is staggering and exhibits classic bubble characteristics where the big moves happen towards the end (relatively)

[StainlessSteelCat]

Nothing to worry about though - the average home owners personal wealth has gone up squintillion percent since 2004.

[Crossbow]

http://www.equitypropertyportfolios.co.uk/...wales-18303856/

http://www.aboutproperty.co.uk/news/uk-pro...#036;479267.htm

45% of all mortgage debt borrowed since 2004

Says it all really, a great post.

The reduction in interest rates in 2005 was a green light to the irresponsible borrowers.

That, and the BBC's ridiculous emphasis on home as profit, through a number of property porn programmes, has caused this current bubble in house price inflation.

Cameron, from a poor position, should surely triumph in the face of this, to put the power back in the hands of the smart.

[Moo]

Given that it includes remortgaging, it's not quite as shocking as it could be. Nevertheless, it does have "smell the reset" written all over it.

[alabala]

http://www.communities.gov.uk/documents/ho...nginEngland0506

Housing in England 2005/06

A report principally from the 2005/06

Survey of English Housing carried

out by the National Centre for

Social Research on behalf of

Communities and Local Government

Ownership of second homes is dominated by those in the 45-64 age group, who account for

60% of all second homes. By comparison only 38% of owner occupied homes in England are

owned by people in this age group.

The largest groups (see Chart 3.5) were those intending to rely on proceeds from the sale of their

current property (36%) and those intending to use savings/investments that were not linked to their

mortgage (20%).

A further 21% were intending to change to a repayment mortgage. Four per cent did not know

how they would repay their mortgage.

By value, 82%

of the total amount outstanding was accounted for by mortgages that started in 2000 or later. This

concentration in recent years reflects not only the increased size of mortgages resulting from higher

property prices, but also a high level of re-mortgaging (often associated with an increase in the

amount borrowed).

Most fixed rate mortgages are only fixed for a few years, after which they become variable – unless

borrowers then choose to switch to another fixed rate deal. The majority (53%) of mortgages had a

variable rate of interest.

By comparison, from 2000/01 to 2005/06, the number of households with second homes abroad

has risen by more than 60%, from 129,000 to 211,000.

Edited October 3, 2007 by alabala

[council dweller]

I'm shocked....shocked ..to find that gambling has been going on here !

How much of the U.K.'s six trillion of 'wealth' has been borrowed into existance

since 2004 ? What a glorious epoch we have just lived through!! I feel humbled....almost.

[backtoparents]

Cameron, from a poor position, should surely triumph in the face of this, to put the power back in the hands of the smart.

Cameron is friends with Kirsty....

btp

[Guest happy?]

http://www.equitypropertyportfolios.co.uk/...wales-18303856/

http://www.aboutproperty.co.uk/news/uk-pro...#036;479267.htm

45% of all mortgage debt borrowed since 2004

OMG....

It's a meaningless statistic because it has no context. 45% of mortgage debt has been borrowed in the last three years. How does this compare with the previous ten, twenty, or thirty years. Are we talking about total value of debt or number of mortgagees?

A meaningless statistic that raises more questions than answers.

[Guest Bart of Darkness]

I'm shocked....shocked ..to find that gambling has been going on here !

Got to be one of my favourite lines in the whole film.

That and the "are my eyes really brown" bit.

Here's lookin' at you kid.

[the_duke_of_hazzard]

I'm shocked....shocked ..to find that gambling has been going on here !

Your winnings bear... - I mean sir!

Edited October 3, 2007 by the_duke_of_hazzard

[chichi]

So what happens?

Businesses can't pay the mortgages, how quick do banks jump in?

[alabala]

It's a meaningless statistic because it has no context. 45% of mortgage debt has been borrowed in the last three years. How does this compare with the previous ten, twenty, or thirty years. Are we talking about total value of debt or number of mortgagees?

A meaningless statistic that raises more questions than answers.

http://www.communities.gov.uk/documents/ho...nginEngland0506

By value, 82% (total of £619.4 billion still outstanding)

of the total amount outstanding was accounted for by mortgages that started in 2000 or later. This

concentration in recent years reflects not only the increased size of mortgages resulting from higher

property prices, but also a high level of re-mortgaging (often associated with an increase in the

amount borrowed).

Edited October 3, 2007 by alabala

[Guest happy?]

http://www.communities.gov.uk/documents/ho...nginEngland0506

By value, 82% (total of £619.4 billion still outstanding)

of the total amount outstanding was accounted for by mortgages that started in 2000 or later. This

concentration in recent years reflects not only the increased size of mortgages resulting from higher

property prices, but also a high level of re-mortgaging (often associated with an increase in the

amount borrowed).

Thanks - now that's more like something worth reading.

[Guest happy?]

http://www.communities.gov.uk/documents/ho...nginEngland0506

By value, 82% (total of £619.4 billion still outstanding)

of the total amount outstanding was accounted for by mortgages that started in 2000 or later. This

concentration in recent years reflects not only the increased size of mortgages resulting from higher

property prices, but also a high level of re-mortgaging (often associated with an increase in the

amount borrowed).

Report also shows that:

Total % of owner occupiers with no mortgage has increased from 38% to 44% since 1997.

The proportion with an interest-only mortgage decreased from 67% in 1995/96 to 25% in 2005/06.

Conversely, the proportion with a repayment mortgage rose from 30% to 66% across the same

period. [Table 3.7]

Currently reading data re FTB (who in my judgement are likely to be the biggest single vulnerable group in a recession). But the data doesn't really prove the pending apocalypse which the initial headlines suggested

[Justice]

Given that it includes remortgaging, it's not quite as shocking as it could be. Nevertheless, it does have "smell the reset" written all over it.

Just goes to show how many people that had property from the past beleive that a new 4 X 4 is so good it's worth paying for the next 20 years by MEWing or do you think these people just stop when they have covered the credit cards.

Lots of cheap 4 X 4 coming my way soon, well if i ever wanted one, which i don't

Edited October 3, 2007 by Justice

[Nicholas Cage]

UK worth £6.5 trillion

Increase of £326 bn on previous year

Only increase in UK PLC net worth is housing, 60% of the entire UKs portfolio is residential property.

NPISHs = non-profit organisations sector

http://www.statistics.gov.uk/cci/nugget.asp?id=479

Edited October 3, 2007 by maxwell

[Guest happy?]

Just goes to show how many people that had property from the past beleive that a new 4 X 4 is so good it's worth paying for the next 20 years by MEWing or do you think these people just stop when they have covered the credit cards.

Lots of cheap 4 X 4 coming my way soon, well if i ever wanted one, which i don't

I think that's the problem with the stats - there's insufficient data to support or deny this position. It just says that 45% of mortgage debt has been taken out since 2004 - it can be interpreted six different ways till Sunday.

[vfr]

It's a meaningless statistic because it has no context. 45% of mortgage debt has been borrowed in the last three years. How does this compare with the previous ten, twenty, or thirty years. Are we talking about total value of debt or number of mortgagees?

A meaningless statistic that raises more questions than answers.

so heres one of the questions it raises. Surely it's only meaningless if 45% or say 40% with HPI of all mortgaged property has been re-mortgaged?

[alabala]

Report also shows that:

Total % of owner occupiers with no mortgage has increased from 38% to 44% since 1997.

The proportion with an interest-only mortgage decreased from 67% in 1995/96 to 25% in 2005/06.

Conversely, the proportion with a repayment mortgage rose from 30% to 66% across the same

period. [Table 3.7]

Currently reading data re FTB (who in my judgement are likely to be the biggest single vulnerable group in a recession). But the data doesn't really prove the pending apocalypse which the initial headlines suggested

Irrational Exuberance?Cheap Credit?Financial Illiteracy?

What about these little monkeys:

Increase in advertising of mortgages, credit cards and personal loans,…

Properties abroad, homes renovations, property porn, property flipping…

No Problem here, here in UK we don’t have any problems.

http://www.newstatesman.com/200603060014

That old idea of the housing market as a pain-free gateway to instant riches is so last millennium. Different formats cover every eventuality. Buy-to-let market slowing down? A perfect opportunity for audience schadenfreude, as stubborn souls ignore the sage advice of Sarah Beeny, replace their Victorian fireplaces with MDF fakes and end up in penury. No more bargains to be had in the provinces? Check out the prices in Prague or Vilnius. First-time buyers can't get on the property ladder? Try Come Buy With Me, a new BBC3 game show that pairs off strangers so they can buy a house together.

In this climate the housing market must never be seen for what it is: an unstable amalgam of public-relations hype, guesswork and groupthink, to which property porn contributes. It must be seen as rational and predictable - an identifiable entity to which various authorities (mortgage lenders, estate agents, television presenters) can bring their "professional" expertise. In property porn everything happens for a reason.

http://www.telegraph.co.uk/money/main.jhtm...cngrspan117.xml

Mr Greenspan:

"Britain is more exposed than we are - in the sense that you have a good deal more adjustable-rate mortgages," he says, referring to the standard variable rate loans that many households have chosen over fixed-rate deals.

http://www.hm-treasury.gov.uk/media/3/C/mi..._470%5B1%5D.pdf

In the 2004 Financial Risk Outlook the FSA points out that firms

advertising ways in which households can access credit tends to ‘highlight how cheap and

affordable the debt is in the short term’, and that this is ‘unlikely to help consumers understand

issues such as the long-term affordability of debt’ (FSA, 2004).The most significant growth

over the last two years has been in advertising of mortgages, credit cards and personal loans

The take-up of longer-term fixed-rate mortgages in the UK is at a much lower level that

one might expect based on a model of optimal mortgage choice. That model assumes households

are well informed and able to understand and assess risks. It also assumes mortgages are priced in

a transparent and sustainable way. There are many potential reasons why the take-up of such

mortgages in the UK may have been so low. They include imperfect understanding of risks and of

the likely profile of future interest rates, a tendency to focus on initial payments on mortgages, and

a pricing structure that plays to that tendency.

Many homeowners initially have debt servicing costs of around a quarter of their income;

for such households the ratio of mortgage costs to income can be extremely sensitive to interest rate

changes.1

The Interim Report presented evidence showing that many households in the UK attach

great weight to the level of current, short-term interest rates when they decide how much to borrow

and what type of mortgage to take out. Less weight seems to be placed upon the likely path of

interest rates some years ahead, even though the great majority of households with mortgages will

still have substantial amounts of variable-rate debt for many years.

Monetary policy will be easier to manage if households make well-informed decisions

about mortgage products that are priced in a transparent and sustainable way and where the risks

of different types of mortgage are well understood. If that is how the mortgage market worked it

would work better. Section 2 presented some evidence that if the market worked better there would

be more longer-term fixed rate lending. The risks of over-indebtedness, of problems of debt

affordability triggered by interest rate rises, and of excess volatility in the housing market would be

reduced. Those risks can make monetary policy more difficult to operate.

‘… studies highlight that the information that consumers say they need is predominantly

focused on the immediate monthly mortgage costs in order to assess initial affordability, and

that they do not have longer-term horizons’ (FSA, 2001b).

Research carried out

by the Office of National Statistics found that half the adult population in the UK had an

understanding of numerical concepts that did not go beyond simple addition and subtraction,

meaning that they were unable to understand percentages and other concepts vital for financial

literacy (ONS, 1997).

Edited October 3, 2007 by alabala

[council dweller]

Got to be one of my favourite lines in the whole film.

That and the "are my eyes really brown" bit.

Here's lookin' at you kid.

Love every moment of that film, even the rubbish bits.

I also like. "why did you come to Casablanca Rick?"

"I came for the waters"

"but there are no waters in Casablanca, we're in the desert"

" I was mis-informed"

[Guest grumpy-old-man]

http://www.equitypropertyportfolios.co.uk/...wales-18303856/

http://www.aboutproperty.co.uk/news/uk-pro...#036;479267.htm

45% of all mortgage debt borrowed since 2004

OMG....

great post alabala, as usual.

this confirms what I have thought for a while now that equity release is far bigger than most admit.

I love it when they publish the street surveys about debt:

A recent survey said they asked loads of people who were walking with friends how much debt they were in, all of them said they didn't have any really.

just wait til the resets kick in & the sentiment turns properly, I think around xmas time/ new year, traditionaly skint time of the year, then we will start seeing the true extent of the borrowing.

[bearbullfence]

http://www.equitypropertyportfolios.co.uk/...wales-18303856/

http://www.aboutproperty.co.uk/news/uk-pro...#036;479267.htm

45% of all mortgage debt borrowed since 2004

OMG....

Given that most mortgage resets are around two to three years and that even people that had held a mortgage over a longer time would have wanted to fix at a low rate then this is no big deal whatsoever.

[uro_who]

Given that most mortgage resets are around two to three years and that even people that had held a mortgage over a longer time would have wanted to fix at a low rate then this is no big deal whatsoever.

Except that the size of the debt has doubled in the last 10 years

[uro_who]

Report also shows that:

Total % of owner occupiers with no mortgage has increased from 38% to 44% since 1997.

The proportion with an interest-only mortgage decreased from 67% in 1995/96 to 25% in 2005/06.

Conversely, the proportion with a repayment mortgage rose from 30% to 66% across the same

period. [Table 3.7]

Currently reading data re FTB (who in my judgement are likely to be the biggest single vulnerable group in a recession). But the data doesn't really prove the pending apocalypse which the initial headlines suggested

The fall in interest only is due to the popularity of endowment mortgages in 1995. Every one of those had an endowment organised to pay off the loan (or not as the case may be). The difference now is that many interest only mortgages taken out today do not have a repayment plan other than hope the salary goes up or mum and dad die.

Edited October 4, 2007 by uro_who