Thought Id start this one going because its rather dead on this board at the moment and I suppose all my usual muckers are either at the Stella tennis event watching Dim Tim (lose again) or at Henly Regatta eating cucumber sandwiches (they wish,...NOT).

Anyway please feel free to just talk to yourself blast away and let it go on any company or subject you wish. Just wish Id thought of this one before.

cheers GF.

Millions face becoming ‘mortgage prisoners’ as rise in interest rates could trap to 2.3m homeowners

ANDREW GRICE Author Biography POLITICAL EDITOR Tuesday 20 May 2014
About 2.3 million householders could become “mortgage prisoners” who struggle to afford their repayments when interest rates rise, according to a report published today.

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In the first detailed study of the likely impact of rate rises, the Resolution Foundation think tank predicted that 770,000 households - one in 10 of those with mortgages - will be most at risk. They will be unable to switch to better deals to protect themselves against rate rises or will find that their monthly repayments soak up at least one third of their disposable income by 2018.

Although the Bank of England last week played down the prospect of an early increase in interest rates, City analysts expect them to start rising from April next year. Some Conservatives are nervous about the political impact of a rise before next May’s general election., Mark Carney, the Bank’s Governor, who said at the weekend that it might intervene to stop the housing market overheating, added: “We don’t want to build up another big debt overhang that is going to hurt individuals and is very much going to slow the economy in the medium term.”

The independent think tank raised the alarm about the most vulnerable 770,000 households already with mortgages, saying they were “doubly exposed”. Typically, they might have very low equity in their home (less than five per cent), might be self-employed or have an interest-only mortgage, making them less attractive to lenders. Secondly, it would take only a relatively modest rise in rates by 2018 for a third of their income to be eaten up by mortgage repayments.

Today’s report, “Mortgaged Future”, cast doubt on the so-called “golden age” for home-buyers while interest rates have remained at a record low 0.5 per cent for five years. Although a household with a £75,000 tracker mortgage has saved £12,400 since 2008, many people have missed out. Wages rose by less than inflation and some householders failed to get the full reduction in rates because they were on fixed-rate deals or because their lender did not pass on all the benefit. So the proportion of people struggling to pay their mortgage fell only slightly during this period and still stands at 1.1 million today, the foundation said.

That figure could more than double to 2.3 million households – almost one in four of the 8.4 million with mortgages - by 2018 if interest rates rise to three per cent as financial markets expect. The report said the total number at risk of becoming “mortgage prisoners” could be as high as 3.5million, but some of these will be able to negotiate new terms with their lender. However, those with low equity or interest-only mortgages will find it difficult to access new deals, the foundation feared, especially as tighter lending conditions have just been imposed following the financial crisis.

Matthew Whittaker, the Foundation’s chief economist and the report’s author, said: “Many borrowers have enjoyed spectacular savings over recent years, with mortgage rates falling to historic lows, and most will be able to ride the tide of gradually rising interest rates. But for around one in four, even modest rate rises could create financial difficulties. Those at greatest risk are members of this group who also find themselves unable to access the best deals in the market today. Almost one in 10 households are doubly exposed: facing the prospect of their mortgage becoming increasingly unaffordable in the future and with the market offering them limited, if any, choice today.”

He added: “There is still a window of opportunity to think creatively about the best way of reducing the risk to this vulnerable group while we still have ultra-low interest rates. But that era is coming to an end relatively soon and the legacy of easy credit and the associated debt-overhang will have to be reckoned with. Financial institutions and policy-makers must consider now how best to minimise the scale of the adjustment problems these families face when interest rates start to return to normal.”

According to the foundation, the current “affordability problem” is greatest among the lowest-income households. Some 25 per cent of those already spending more than a third of their income on mortgage repayments are in the bottom tenth of the income ladder.

As interest rates rise, the problem is set to spread up the income scale. By 2018, only 15 per cent of those spending a third of their income on mortgage repayments are expected to be in the lowest tenth of the income distribution.

London and the East of England are most exposed to risk. Some 35 per cent of mortgagors in these regions will spend a third of their income on repayments by 2018, compared to only 18 per cent in Scotland and 19 per cent in Yorkshire and the Humber and 22 per cent in Wales.

Northern Ireland and London are the parts of the UK where borrowers are most likely to be in the most vulnerable group – with 16 per cent and 13 per cent of mortgagors respectively projected to be both spending a third of their income in 2018 and at risk of being “mortgage prisoners” today. Northern Ireland is the region where low equity is most common – 35 per cent of mortgagors have less than five per cent equity in their home, compared to just two per cent in London.

Usual rubbish

Lot of copy & paste this morning

Hays your running scared.

gf
You are desperate to find some bad news.

monthly repayments soak up at least one third of their disposable income by 2018.
what's wrong with that?
memory tells me that that is about what would expect

Problem is c, they don't have any disposable income.

chuckle chuckle
never mind; i'm sure you and i (the taxpayer) will bail them out with housing benefits

really couldn't be bothered to read all that junk, but the above phrase caught my eye as i quickly skimmed down

at what level are mortgage rates generally now?
i think the historic norm is around 5%, though there have certainly been times when a certain party created terrifying inflation in mid/late 70s when they were around 10/12%

It was the late 80s. Peak was 89 when BoE rate was 14.87% and some mortgages were almost 20%. I bought a property in 89 and was in negative equity for years. In the end it went up four times in price before I sold it.

that must have been a second phase as the hyper-inflation was much earlier ... i know from when i was running my little bistro from 1978 to 1985

You are right. The bank rate was 17% in 1979.

The Great Inflation Of The 1970s

By Gregory Bresiger on July 08, 2009 AAA


It's the 1970s, and the stock market is a mess. It loses 40% in an 18-month period, and for close to a decade few people want anything to do with stocks. Economic growth is weak, which results in rising unemployment that eventually reaches double-digits. The easy-money policies of the American central bank, which were designed to generate full employment, by the early 1970s, also caused high inflation. The central bank, under different leadership, would later reverse its policies, raising interest rates to some 20%, a number once considered usurious. For interest-sensitive industries, such as housing and cars, rising interest rates cause a calamity. With interest rates skyrocketing, many people are priced out of new cars and homes. (Learn more in A Review Of Past Recessions.)
2517

Here are the figures

http://www.bankofengland.co.uk/statistics/rates/baserate.xls

..

ABU HAMZA - why try in USA?
i heard a chap on the tv this morning saying that AH should have been tried in UK as much of the strong evidence and actions were carried out here.

in my opinion, extraditing the bastard to USA was a great move and the americans, whatever their many faults, hold no truck with terrorists and a life sentence means exactly that with no recourse of bleating to bleeding heart brigade courts in europe

Official Bank Rate hasn't changed from 0.5% since 5 March 2009. That's over 5 years now and there looks like being at least yet another one.

I wonder if there isn't something wrong with this policy? How does it make people feel? What is really the intention behind the doing of it?

Is it, that 'Cash earns you next to nothing and so you just have to find a slightly riskier thing to do with it than just leave it in the bank' and this involvement creates growth?

Property is now a bit of dodgy investment in most areas. Correction ahead?
Stocks are very volatile and are looking a fair bit overbought. Correction ahead?

Anyone got any ideas?

Good to see AH in prison for the rest of his life. We used to see him preaching in street when we took the kids to school on the school run. When he was thrown out of the Finsbury Park Mosque, they found guns and bomb making equipment in the basement.

long term - bricks and mortar but location is everything

shares - depends what you're looking for; there's still value and if you have a high risk-tolerance, then there's plenty of garbage to excite that just may come right

interest rates - raising interest rates too early would (have) kipper(ed) any economic revival

Ed Miliband calls politicians out of touch in TV interview - then has no idea how much he spends on his own weekly shop



Tory secret weapon




Good Morning Britain presenter Susannah Reid says Miliband himself appeared 'out of touch with reality'




Adam Withnall Author Biography




Tuesday 20 May 2014



The Labour leader Ed Miliband has been accused of being “out of touch with reality” after he appeared not to know what he – or indeed the average British family – pays for their weekly shop.


Appearing on ITV’s Good Morning Britain, Mr Miliband described how disconnected the country’s leadership is from ordinary people who, he said, feel Britain is run “for a few people at the top and not for them”.

He said that Labour would make it a priority to tackle the cost-of-living crisis – yet appeared to struggle when pressed on how much he personally knows about “the actual cost of living for people”.

Asked if he knew what the average household grocery bill per week was for a family in the UK, Mr Miliband said: “Well, it depends how much you’re spending.”



More: http://www.independent.co.uk/news/ed-miliband-calls-politicians-out-of-touch-in-tv-interview--then-has-no-idea-how-much-he-spends-on-his-own-weekly-shop-9402068.html