78% Of Residential Property Has A Mortgage

[234SALE]

The average family income is £32,779 before tax.

According to ONS figures, an average family of two adults and two children spends £601.20 a week, compared with a couple's average spend of £527.30. In other words, a family spends £155.60 per head, compared with a couple's spend of £263.60 per head.

http://news.bbc.co.uk/2/hi/uk_news/7071611.stm

So 78% of residential property has a mortgage

Edited November 7, 2007 by 234SALE

[Nelly]

Some one on here or the other was saying 40% of houses are paid off the other day!

[OnlyMe]

This is the new Nulabour version, one waiting for those indebted by the education system and screwed by high living costs.

Edited November 7, 2007 by OnlyMe

[Disillusioned]

So 78% of residential property has a mortgage

...but how large are those mortgages? I'm not convinced that this 78% is a helpful figure really. I'd be more interested in the margins: those with 90% and over.

[Lord D'arcy Pew]

Perhaps this.

Edited November 7, 2007 by Lord D'arcy Pew

[stuckmojo]

Perhaps this.

nice one

[starsign]

...but how large are those mortgages? I'm not convinced that this 78% is a helpful figure really. I'd be more interested in the margins: those with 90% and over.

exactly right...i expect the average household has loads of equity - i think the average mortgage (of people who have a mortgage) is around £100K when the average house is around £200K...this does not shout debt problem, the more important figures are definitely the margins.

[Converted Lurker]

exactly right...i expect the average household has loads of equity - i think the average mortgage (of people who have a mortgage) is around £100K when the average house is around £200K...this does not shout debt problem, the more important figures are definitely the margins.

If you're going to argue averages you have to stick to averages, not pick and choose. I've been doing a bit of research on Joe Average and was pleased to see the ONS begin to explode some myths - Average household mortgage is 140K, average house price (Nationwide) 190K, doesn't read that well does it? Average Joe only has 50K equity, 70K according to some indices, perhaps at the extreme 85K if you believe other stats from FT Index etc. Now with a modest correction of 25% off values Average Joe is approaching zero/negative equity. Ten years ago the average outstanding mortgage was 50K, just as house prices have trebled so have mortgages. What is increasingly rare is to find folk that have simply; gone to work, ignored all the noise re. house prices, have lived in the same house for ten years, kept their head down and their finances straight and paid down the mortgage. That certainly isn't Average Joe who has remortgaged twice. In fact according to recent research only 20% of mortgage holders have stayed loyal to their original lender over the past ten years. Moving mortgage, taking out equity, (MEW) is more common than most think and has been a huge driver to our one track economy. Mrs Average Joe has insisted on keeping up with the Joneses

[234SALE]

Thanks, Ive been trying also to find this infomation, It reflects the true playing field.

Interest rates at current levels, if held for 6 more months will return prices to 2005 levels

[Bosco]

If you're going to argue averages you have to stick to averages, not pick and choose. I've been doing a bit of research on Joe Average and was pleased to see the ONS begin to explode some myths - Average household mortgage is 140K, average house price (Nationwide) 190K, doesn't read that well does it? Average Joe only has 50K equity, 70K according to some indices, perhaps at the extreme 85K if you believe other stats from FT Index etc. Now with a modest correction of 25% off values Average Joe is approaching zero/negative equity. Ten years ago the average outstanding mortgage was 50K, just as house prices have trebled so have mortgages. What is increasingly rare is to find folk that have simply; gone to work, ignored all the noise re. house prices, have lived in the same house for ten years, kept their head down and their finances straight and paid down the mortgage. That certainly isn't Average Joe who has remortgaged twice. In fact according to recent research only 20% of mortgage holders have stayed loyal to their original lender over the past ten years. Moving mortgage, taking out equity, (MEW) is more common than most think and has been a huge driver to our one track economy. Mrs Average Joe has insisted on keeping up with the Joneses

Well said old chap, MEW has enabled our 'economy' to stay soooooooooooooo strong!

[silver surfer]

If you're going to argue averages you have to stick to averages, not pick and choose. I've been doing a bit of research on Joe Average and was pleased to see the ONS begin to explode some myths - Average household mortgage is 140K, average house price (Nationwide) 190K, doesn't read that well does it? Average Joe only has 50K equity, 70K according to some indices, perhaps at the extreme 85K if you believe other stats from FT Index etc. Now with a modest correction of 25% off values Average Joe is approaching zero/negative equity. Ten years ago the average outstanding mortgage was 50K, just as house prices have trebled so have mortgages. What is increasingly rare is to find folk that have simply; gone to work, ignored all the noise re. house prices, have lived in the same house for ten years, kept their head down and their finances straight and paid down the mortgage. That certainly isn't Average Joe who has remortgaged twice. In fact according to recent research only 20% of mortgage holders have stayed loyal to their original lender over the past ten years. Moving mortgage, taking out equity, (MEW) is more common than most think and has been a huge driver to our one track economy. Mrs Average Joe has insisted on keeping up with the Joneses

Very well put. If property is all about "location, location, location", then economics for the forseeable future is all about "debt, debt, debt".

[Bosco]

The average family income is £32,779 before tax.

According to ONS figures, an average family of two adults and two children spends £601.20 a week, compared with a couple's average spend of £527.30. In other words, a family spends £155.60 per head, compared with a couple's spend of £263.60 per head.

<a href="http://news.bbc.co.uk/2/hi/uk_news/7071611.stm" target="_blank">http://news.bbc.co.uk/2/hi/uk_news/7071611.stm</a>

So 78% of residential property has a mortgage

Your twisting the facts- Gordon would be proud.

What the report really says is 79% of FAMILIES have a mortgaged home, not 78% of residential property has a mortgage on it.

[HOwner]

Obviously that is not the owners mortgage either. I thought that home owner was about 68% or something..

[Surrey cash buyer]

Average household mortgage is 140K,

Are you sure it's this high? Average new mortgage perhaps.

[phobos]

If there are 17.1 million families in the Uk with an average of 2 adults plus 1.8 kids, that is 17.1 x 3.8 = 64.98 million people in the Uk excluding single people, and OAPs and adults w/o family?

hmmm

[Guest d23]

. Now with a modest correction of 25% off values Average Joe is approaching zero/negative equity.

modest correction of 25%

not sure what to make of these figures, as there are many many other sources (DCLG, creditaction ) put the owned outright figure at 40%

I guess if it's just families with dependent children then the figure could be correct as according to ONS 50% of couples with no dependent children and 40% of single person households are owned outright

doesn't need to be that many people getting in trouble to cause real problems tho

p.s. congrats on the RB'esque title to your thread btw

Edited November 7, 2007 by d23

[Converted Lurker]

modest correction of 25%

not sure what to make of these figures, as there are many many other sources (DCLG, creditaction ) put the owned outright figure at 40%

I guess if it's just families with dependent children then the figure could be correct as according to ONS 50% of couples with no dependent children and 40% of single person households are owned outright

doesn't need to be that many people getting in trouble to cause real problems tho

p.s. congrats on the RB'esque title to your thread btw

A 25% correction is simply the 'froth' off the top surely? market goes up 300% in ten years, can't correct by 25%?

[Orbital]

That certainly isn't Average Joe who has remortgaged twice. In fact according to recent research only 20% of mortgage holders have stayed loyal to their original lender over the past ten years.

erm.. this is a good thing. People remortgage to get better mortgage rates. Why would any sane person stay on the svr?! The interesting point is actually any associated equity release.

[Guest d23]

A 25% correction is simply the 'froth' off the top surely? market goes up 300% in ten years, can't correct by 25%?

i understand what you're saying but i do think you're tripping if you think 25% is a 'modest correction'; thatt's a crash surely?

of course it's 100% possible / likely but to describe it as you have presumably means 'Great Crash 1' should really be called 'Modest Correction 1', which doesn't really have the same ring to it.

[dubsie]

I don't doubt the stats at all but it would be more interesting to see how much people owe against the value of their house.

I have a mortgage and on the current prices probably own about 30% of it, this would put me at risk if house prices were to fall by much as 40%. I'm probably very lucky in that I know of a number of people who actually took out a 110% mortgage, as they added the stamp duty and fees to the actual mortgage. I'm not sure how many people there are like this but I know they exist.

I've been looking at my mortgage and despite paying nearly £600.00 pcm month the actual amount my loan reduces by is very little, probably £2000 per annum. Swapping also has it's problems as you have to pay fees which can amount to as much as £1500.00 every time you change product. Therefore on a 2 year fixed rate product you probably only reducing your loan by £2500.00 every 2 years because you have to account for the fees. If you then add your insurance and maintenance then your house starts to appear very expensive.

I think the housing market has been driven by availability of credit, the fact that products exist that will allow a borrower to borrow more money than the value of a property is once reason why we've seen a soar in the number of people buying property. The removal of this type of credit will certainly stop a great number of people getting on the ladder but whether it will cause property to crash by as much as 40% remains to be seen. People are not going to be in a position to sell if they are unable to secure another loan or if they subject to negative equity, it's not something you can just walk away from....your trapped.

[Converted Lurker]

erm.. this is a good thing. People remortgage to get better mortgage rates. Why would any sane person stay on the svr?! The interesting point is actually any associated equity release.

Broker "So Mr. Average it's time to look at you mortgage as you've had the same one for five years. Now then, here's a deal; we'll lower your monthly cost, reduce the term and it'll cost you nothing as there's absolutely no fees" D'ya see anything wrong in that pitch? Re-mortgaging can lower monthly costs, but in order to do that the term generally reverts to 25 years and the broker takes a fee The only sensible re-mortgage IMHO is offsetting with the ability to link over payments to reducing capital and outstanding term which accounts for (iirc) less than 3% of the mortgage market. Everything else is noise oh and profit which magically comes the minute the customer signs the new fresh deal...

Edited November 7, 2007 by Converted Lurker

[Converted Lurker]

i understand what you're saying but i do think you're tripping if you think 25% is a 'modest correction'; thatt's a crash surely?

of course it's 100% possible / likely but to describe it as you have presumably means 'Great Crash 1' should really be called 'Modest Correction 1', which doesn't really have the same ring to it.

I'm now seeing (for the first time) valuations differing (being re-valued) by up to 10% by the valuer even at the FTB level of circa 150K. So there's (theoretically) a 10% crash simply due to sentiment affecting surveyors. As always you must remove your own pre-conceptions from any analysis. The Morgan Stanley CE recently described 40% of house valuations as "froth", I reckon 25%, over a 3 year period, is very realistic. It'll take us back to the 'sunny halycon affordability days' of sunny 2004-2005.

[Guest Charlie The Tramp]

80% of retired pensioner home owners do not owe a penny on their homes.

Source: Credit Action Stats.

[Guest d23]

I'm now seeing (for the first time) valuations differing (being re-valued) by up to 10% by the valuer even at the FTB level of circa 150K. So there's (theoretically) a 10% crash simply due to sentiment affecting surveyors. As always you must remove your own pre-conceptions from any analysis. The Morgan Stanley CE recently described 40% of house valuations as "froth", I reckon 25%, over a 3 year period, is very realistic. It'll take us back to the 'sunny halycon affordability days' of sunny 2004-2005.

agreed, I think a 25% drop is feasible (and even more altho I think thats less likely) but that would be a crash, even over a few years

not sure who else would describe a 25% drop in UK house prices as a modest correction.

[A.steve]

80% of retired pensioner home owners do not owe a penny on their homes.

Source: Credit Action Stats.

Absolutely... I also wonder what proportion of properties with a mortgage are in a similar position to that of my parents a month or so ago. Their house had a trivially small mortgage secured on it (I've more cash in my wallet!) and the logic was this:

* The mortgage was tied in with house insurance.

* With an open mortgage, this provided the potential for MEW in the extremely unlikely case of a temporary emergency - which would be far cheaper than a bridging or unsecured loan.

* It required effort to deal with the paperwork.

If there are a lot of people like my folks, and I see no reason to doubt that this is the case, then of those with non-trivial mortgages, the LTV is likely a *lot* higher than the mean LTV suggests.