Wednesday, April 18, 2012

Awesome bit of Home-Owner-Ist special pleading…

Britain's interest-only mortgage time-bomb

"Walter Harper has lived in his beloved home for two decades — but last July he was forced to put it on the market. He shared the Luton bungalow with his wife and, after she passed away, his partner, and has watched his grandchildren play there. But he is being forced to move because he owes £110,000 on an interest-only mortgage that he can’t afford to repay. Instead of spending his last days in the house he loves, he will be forced to rent elsewhere. Mr Harper, 69, first put his house on the market for £230,000. He has dropped the asking price by £20,000 and even if he gets this, he will still lose half of the money paying off the bank. These are savings he desperately needs, as rent is going to cost him almost £9,000 a year."

Posted by mark wadsworth @ 01:20 PM (3823 views)
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25 thoughts on “Awesome bit of Home-Owner-Ist special pleading…

  • sibley's b'stard child says:

    Quality from start to finish, assuming these people aren’t fictitious, i’m not sure what angle the DM is taking; disapproving or shroud-waving.

    In 1990, Allan Keith Dixon, 58, and his wife Maureen, 62, took out a £100,000 interest-only loan for their bungalow in Tyne & Wear. They also took out an endowment policy, but this failed dismally. Their house is now worth £325,000, but they don’t want to sell. Instead they will extend their mortgage term until they receive a windfall from a relative.
    ‘We will just keep paying our mortgage until we receive our inheritance,’ says Mr Dixon, a retired teacher who became a mortgage adviser.

    Uh-huh, that looks like a water-tight plan to me.

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  • Article seems to refer to those mortgages maturing over the next eight years, it fails to mention the millions commenced over the last decade, and the fact that most high street banks are still selling this type of mortgage.

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  • “He has dropped the asking price by £20,000 and even if he gets this, he will still lose half of the money paying off the bank.”
    I can see another banking scandal resulting from this – lending money and expecting it back – whatever next? Scum, the lot of them.

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  • European Bear says:

    Well he is 69, life expectancy is 10 years. So the 100,000 he clears will easily pay the rent for the rest of his life. He might even find he is better off….

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  • “it fails to mention the millions commenced over the last decade”

    And who took those out?

    I bet the majority were in the generation that now considers itself badly done by.

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  • Mr g @ 4

    Yes perhaps too many interest only mortgages were used to buy houses by the younger generations, but that was the cause of prices doubling over a short period. Many of these youngsters are now declaring to the banks that they will be able to pay off the capital when their parents die. That’s a nice thought.

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  • Then the solution is simple. All those parents with kids who have IO mortgages and no repayment vehicle should be euthanised. This will decrease the population of our overcrowded island too…

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  • 1. Portrait recklessness as innocence, check
    2. MEW? Shhhhhhhh. Check
    3. Do not EVER explain why a house bought for £50,000 20 years ago, now has £250,000 mortgage on it. Check
    4. Present £185 monthly mortgage payment as a bad/expensive deal for the homeowner, check

    Darling, now you can publish this piece of finest journalism.

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  • mark wadsworth says:

    Mr G, yes, that’s typical Pensioners’ Party stuff isn’t it “Ooh the reckless yoof of today with their six times salary mortgages” well they’d have been delighted to take out much smaller mortgages if the Home-Owner-Ist Party hadn’t ramped up house prices and lent them the money.

    As to our Mr Harper, if his house is worth £200,000 and he bought it 20 years ago, what might he have paid for it? £50,000? So how come he hasn’t paid off the mortgage? how come the mortgage is £110,000? It’s the bloody feckless pensioners bankrupting the country with their MEWing and spending it all on iPods and flat screen tellys, I tell you, when I was a lad etc etc.

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  • @MW “Mr G, yes, that’s typical Pensioners’ Party stuff isn’t it ”

    Not at all, it’s typical old fashioned working class values and aspirations which “metro” types of all political persuasions simply don’t understand.

    You’d better get used to the idea if you intend to stand for UKIP again at the next general election and, as suggested in another post on HPC today, UKIP were in a position to go into coalition with the Tories.

    Now that would pose a bit of a personal dilemma perhaps?

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  • crash bandicoot says:

    mr g, it’s a ponzi scheme. You know that, I know that. So we both know that the ones who benefit are the first into the scheme and the ones who suffer are the last ones in. The bit that I like is that the ones that got in late still thought that they were being clever but will get burned. Just thank your lucky stars that your’e not one of them as I thank my lucky stars that I am not either.

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  • mark wadsworth says:

    Mr G, hooray for old fashioned working class values, but I fail to see why you don’t see anything wrong with Home-Owner-Ism, which is for the benefit of Baby Boomers down south, the bankers, the landowners, the politicians and so on. It’s of absolutely no benefit to the working man.

    My working class values say that going out to work to earn a living should be valued more highly (and taxed more lightly) than merely owning land or running a bank (which can be taxed as highly as you like, it’s pure rent). Young people were stampeded into taking out big mortgages on overpriced homes, it is not their fault that house prices are stupid high, it’s the baby boomers (and older pensioners aren’t boomers but they’re at the front line of NIMBYism) who are the big winners from all this.

    Or do your working class values involve doffing your cap to the landed gentry and being grateful for the fact that the working man can hand over six or seven years’ net wages to the bankers just to own the few hundred square yards of land under his own house (which was no doubt built by other working class people)? Ever so bloody ‘umble.

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  • markj69 str05 says:

    Another small but increasingly influencial point, will be the fact that advances in medicine have and will continue to prolong life of elderly far into their ‘care-home’ senior years. Thus resulting in the selling-off of owned property to pay the bills. Now where did that inheritance go?

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  • Indeed MW – I have nothing to add to that. Thing is, neither will Mr G.

    Perhaps a portrait of said NIMBYist boomers to illustrate your point in pictorial form? Here’s some inspiration …

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  • mark wadsworth says:

    Paul, nice one.

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  • MW I often find myself agreeing with your views but the individuals must take some responsibility for their actions.

    ‘Young people were stampeded into taking out big mortgages on overpriced homes’ – No that was their decision.

    In my late 20’s I was beating myself up about not owning a house, by my early 30’s I had come to terms with not owning one as I did not want a mortgage for 5+ times my salary for a small flat in london.

    Individuals overstretching themselves should not have been bailed out (along with the banks) and the short term pain caused would largely be over by now. Instead we are only half way through our lost decade.

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  • mark wadsworth says:

    Timmy: “the individuals must take some responsibility for their actions.”

    Yes of course. I’m in favour of people taking full responsibility and paying off their mortgages in full and as quickly as possible. But that goes doubly and trebly for the people mentioned in the article who at least had the opportunity to buy an affordable house when they were young and pay off the mortgage in ten or fifteen years* (but miserably failed to do so), and rather less so for the younger people who have been bombarded with ‘house prices can only go up get on the ladder’ propaganda. Count yourself lucky that you managed to rise above the propaganda, most believe it.

    * i.e. yours truly, bought in 1998 when houses were still cheap-ish and took out 11 year repayment mortgage. I have no high opinion of people who bought houses when they were cheap with a 25 year mortgage, get the bloody thing paid off, is my motto. Same goes for buyers pre-1974 whose mortgages were wiped out by inflation.

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  • MW – agreed, when I finally get a mortgage paying it down will be priority no. 1.

    Its scary the number of people who have constantly MEW ie. the person in the article. Also have several friends with interest only mortgages who are not saving to repay the actual loan – crazy esp with such low IR’s.

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  • @MW “Or do your working class values involve doffing your cap to the landed gentry and being grateful for the fact that the working man can hand over six or seven years’ net wages to the bankers just to own the few hundred square yards of land under his own house (which was no doubt built by other working class people)? Ever so bloody ‘umble.”

    I never have and never will doff my cap to anyone which is why I enjoy taking the p*ss out of some of the more sanctimonious contributors to HPC and accept that in doing so I have to be able to take any comments or criticisms that may be thrown back at me. Put another way, I accept the knocks that life gives you and get on with life instead of whingeing about how badly I’ve been treated.

    I’m not going to bore you with my CV yet again but suffice to say that I come from a working class family, started work as a labourer on the shop floor, changed jobs several times and eventually became Production Director with my last firm.

    The point I’m making is that I believe in individuals being responsible for their own actions and getting on with life and improving their lot instead of moaning. Those who took out big mortgages on overpriced houses did so of their own volition because they thought they saw a way of making a fast buck just like those individuals who “sold to rent” and now find that they can’t get back in the market. Tough.

    Seeing that you quote Dickens, consider Mr Micawber’s theory:

    “Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

    He was, of course, stating the bleedin’ obvious. But even if it is obvious, it’s amazing how many people fail to do anything about it. As Micawber said — the result will be misery.

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  • mark wadsworth says:

    Mr G, enough with the working class lad card. I happen to have been very lucky in life, no complaints at all, but it is perfectly clear to me that the system is completely rigged. And I could “get back into the market” tomorrow if I wanted, but I don’t want to, that’s my decision and my choice. You’ll struggle to find a single whiney moany comment from me, that’s not my department, but honesty compels to point out that young people in this country are treated like shit, and your condescending attitude (decrying them all as nail technicians) doesn’t help. Was it today’s young people who shut down all the car plants and coal mines? Methinks not.

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  • @MW

    True, they didn’t shut down the car plants, that was the union dinosaurs, the mines were shut as a result of dinosaurs blindly following Scargill who was only interested in personal power.

    I make no apologies for adopting a condescending attitude to a section of the younger generation, who, never mind nail technicians are virtually unemployable hence the high level of youth unemployment.

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  • @MW

    Let me make it absolutely clear that I am not, repeat not, criticising the younger generation en bloc, the majority are outstanding individuals but to say that as a group / generation they are treated like shit is utter cr*p.

    You’ll probably respond with the sarcastic “when I were a lad” line but most of today’s youngsters have never had it so good.

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  • You just don’t get it MW do you?

    By your own admission you could “get back into the market” tomorrow if you wanted which suggests that you are comfortably off like many HPC’ers who simply enjoy whingeing and, like politicians, live in an idealistic ivory tower far removed from the realities of life. You make the “when I were a lad” comment because it sounds good without knowing what you are talking about.

    Today’s younger generation are no worse off relatively than any other generation at a comparable age, the specific problems to each generation are different but they all represent a hurdle that has to be overcome.

    Hence my comment that you have to take the cr*p that’s thrown at you and get on with life, something that the “I want it and I want it now generation” don’t understand and therefore think they are the worse done by generation ever.

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  • mark wadsworth says:

    Mr G, what you say about young people today is exactly what your parents generation were saying about you when you were young. I don;t care if you were young in the 50s, 60s, 70s, 80s, 90s or this year, it’s the same tired old crap from the know-it-alls about “never had it so good”.

    Fact is, young people “never had it as good” as the oldies make out, and I cheerily admit that young people have always been sh8t on, they’re always the first to be sent off to war, the first to lose their jobs, the first to have their benefits cut etc. I was young in the 1980s it was absolutely bloody terrible and i went off abroad to find work.

    Yes, perhaps car plants and mines was largely trade unions’ fault, but it’s not like trade unions in the 1970s were run by youngsters, and they certainly weren;t run by today’s youngsters. And yes, the state education system is going down the tubes, but whose fault is that exactly? Parents? Teachers? Government? It’s not today’s 20 or 30 year olds’ fault.

    And what is this nonsense about me living in an ivory tower? My socialist parents took me out of school when I was 15 and I got chucked out of home when I was 18, I’ve made my own way since, no bugger ever looked after me. And I get on the same train and work in an office and live in a house like a lot of other people, I read the newspapers, I watch telly, I talk to a lot of people. You’re the one living in the ivory tower with your endless mocking and sniping of nail technicians, what is your obsession with nail technicians? Do you have a sliding scale of honourable manly jobs like Factory Manager or Lorry Driver but haridressers and nail technicians aren’t doing proper jobs or something?

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  • @MW

    “what you say about young people today is exactly what your parents generation were saying about you”

    Spot on, I’ve no argument with that, we agree about something at last!

    “they’re always the first to be sent off to war”

    A silly argument, that has always been the case. You or I would have been first in line if needed when we were younger.

    “I was young in the 1980s it was absolutely bloody terrible and i went off abroad to find work.”

    Correct, take April 1982 as the example being 30 years ago:

    RPI 9.4% Interest rates 13.0% I was married with 2 young children and under threat of redundancy as my employer was in danger of going out of business due to dreadful trade conditions. Unlike you I could not go off abroad to find work.

    Like for like, I was in no better position than someone of a similar age today.

    “Yes, perhaps car plants and mines was largely trade unions’ fault, but it’s not like trade unions in the 1970s were run by youngsters, and they certainly weren;t run by today’s youngsters.”

    I didn’t suggest that they were run by today’s youngsters, they were run by self-serving class warriors.

    “And yes, the state education system is going down the tubes, but whose fault is that exactly?”

    A general acceptance of “dumbing down” in education by parents, teaching unions and government. The “All shall have prizes” ethos has ruled education for the last 30 years at least.

    “And what is this nonsense about me living in an ivory tower? My socialist parents took me out of school when I was 15 and I got chucked out of home when I was 18, I’ve made my own way since, no bugger ever looked after me. And I get on the same train and work in an office and live in a house like a lot of other people, I read the newspapers, I watch telly, I talk to a lot of people.”

    Based on that information you’re no different to millions of other people until you start talking about “Home ownerism” and “Give them money, they own land”
    In making such comments, you miss the point that there are millions of ordinary decent people including “boomers” like myself, who have bought a modest house by working hard and paying off the mortgage, who are not the self serving types who have caused the current problems. I for one resent being tarred with the same brush, hence I play the “working class lad” card.

    “You’re the one living in the ivory tower with your endless mocking and sniping of nail technicians, what is your obsession with nail technicians? Do you have a sliding scale of honourable manly jobs like Factory Manager or Lorry Driver but haridressers and nail technicians aren’t doing proper jobs or something?”

    Wrong, I don’t live in an ivory tower, I understand how ordinary people feel about this country today.

    Nothing wrong with nail technicians in moderation, if I’m mocking anything it’s the crap education system that’s been allowed to evolve by politicians and self serving politically motivated educationalists, which turns out far too many kids who are basically unemployable. I’ve interviewed plenty and I should know.

    I’m not attacking Mark Wadsworth personally, everyone’s entitled to their point of view but the anti boomer, anti home owner rhetoric (not just from yourself incidentally) is puerile especially the sort of crap posted @13 on this article therefore I stand by my statement in an earlier comment that basically, if you dish it out, you should be prepared to accept and take whatever is thrown back at you.

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