Tuesday, May 24, 2011
Ah, that mythical trend of 5% IRs…
Home buyers to spend half of take-home pay on mortgage
“Yet the additional interest rate risk that variable rates expose borrowers to can be overstated. The fact that most fixed rate periods in the UK are just two or three years long means that even most borrowers on fixed rates are exposed to a high degree of interest rate risk.†“If that happens, it would no doubt add to the pressures on mortgage borrowers, but the house price correction that we expect over the coming years will be driven largely by the deteriorating labour market and the sheer unaffordability of housing,†he said. It comes amid a rise in the number of people being evicted from their homes as lenders warn they will not be as tolerant about borrowers failing to keep up with their mortgage payments.
Posted by sibley's b'stard child @ 11:09 AM (1847 views)
5 thoughts on “Ah, that mythical trend of 5% IRs…”
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Crunchy says:
I was wondering when the banks would start to sure up their risk/losses.
Panic begins with the first increased heart beat.
“Calm down dear!”
~ Michael Robert Winner.
mark wadsworth says:
It’s a splendid headline though!
I suppose the “half your net income” figure just about stacks up if your mortage is six times gross salary and you are paying 5% interest + 1% capital repayments, in which case your repayments are 6% x 5 times gross = 30% of gross, and if you are paying 40% income tax (unlikely – the average income tax deducted is about thirty per cent for most people).
paul says:
An inevitable consequence of lenders double dipping first on the prices they are sold at (interesting that both Halifax and Nationwide choose not to publish their monthly house price forecasts any more) and then on the interest rates that they charge.
They’ve left no-one with any breathing space in terms of finances any more.
Crunchy says:
1. mark wadsworth
So who are these people really working for.
Not so easy to ask for a pay increase now, but if however one pay is trashed, is there the option of a new job.
We now live in a perverse employement enviroment, where the government is your Union rep.
How times change. Didn’t see that one coming guv!
Crunchy says:
2. paul said…(interesting that both Halifax and Nationwide choose not to publish their monthly house price forecasts any more)
~ I say, that’s not very sporting, after such a long innings old chap!