Financial News
- 4 January 2013, 18:06
Mortgages: Millions 'Struggle With Payments'
Nearly eight million people in Britain are struggling to keep up with mortgage or rent payments each month, according to the charity Shelter.
A total of 1.4 million have already fallen behind, with almost a million people resorting to high-interest 'pay day' loans to make ends meet.
"It's shocking to think that so many families will be starting the New Year with a huge weight hanging over them, trapped in a daily struggle to keep their home," said the charity's chief executive Campbell Robb.
"Payday loans may seem like a quick fix, but the huge interest charges mean things can quickly spiral out of control.
"It's vital that anyone who's having difficulty paying their rent or mortgage gets advice now. Don't wait until things reach breaking point later in the year - it could leave your family's home at risk."
Mother-of-two Mandy Buxton from West Sussex has found it impossible to balance the books over the past couple of years and opted to take out pay day loans to get by.
It is a decision she now bitterly regrets, as she faces up to having to leave her rented property.
"I got to the point where after I had paid off the loan I had 50p left and that had to last me the month," she told Sky News.
"I realised I couldn't carry on the way I was so I had to say to my boss that I wouldn't be coming back to work because I didn't have the money to get there and back.
"If you have to take a few days off work because one of your children is ill or there is a problem it puts you in a situation where you just can't pay the bills."
But with interest rates at an historic low, how will people cope in the next few years if and when rates go back to where they were before the recession began in 2008?
Mortgage expert Paula John says many people will eventually start moving towards fixed-rate mortgages.
"For hundreds of thousands of families it's only the very low mortgage rates that have been keeping the wolves from the door," she told Sky News.
"Many UK households have really been struggling over the past few years and if rates were to go up it would be a real concern.
"I think people are more financially aware now than they were a few years back and what we will see is a mass movement towards fixed-rate mortgages."
Shelter said it is seeing a rise in demand for its services and pointed out that people are finding "there is little left of the housing safety net that was once there to help them get back on their feet".
what do you think?
stevie may
Poverty and unemployment aren't byproducts of thatcherite capitalism. . They are pernicious intentionally engineered parts of Thatcherism. The ruling elite only get to live in obscene wealth at the expense of a large minority being perpetually kept in poverty. Fact. Capitalism - fascism by any other name. A constant underclass generates wealth for the few and recession is the usual time when the ultrarich get even richer - buying up dirt cheap property that has been recently vacated by the evicted. Fact. More homeless people - more wealth for the elite.
Facebook User
I agree, send money abroad rather than get own house I order. Proves your point exactly. A total disgrace to use the name of charity while keeping people in poverty at home. Contemptable.
blue side
stevie have to disagree and would suggest that the present crisis is a global thing not just a historic political issue. Brown etal tried to avert problems by applying flawed policies which he was warned about by the IMF and other economic bodies but as usual he knew best. The shortfall is a Labour legacy like it or not that is a fact
stevie may
Yes blueside but that's because new labour continued thatcherite fiscal policy
shaun spencer
You just as well put the political parties in a boxing ring next election as far as im concerned, but stevie has a good point in the rich buying these repocessed cheap homes.
chris
Thousands of people went in for the biggest mortgages they could get hold of to buy any properties going because once upon a time it was seen as a guaranteed money maker by selling quick and moving on. worked well for many but its a bit like musical chairs - if you had no intention of paying the payments long term you dont want to be left standing when the music stops!
Brian Holmes
This is nothing new, it is the way of life for the modern Briton. If we didn't have so much of our earnings taken in tax most of us would be living comfortably.
blue side
Brian I would also argue we would have higher tax revenue
Brian Holmes
Yes, I agree. A high tax regime is counter productive.
Nick Bowden
Its a known face that the average 2parents and 2kids family pay 75% tax until the government stop hammering us with tax nothing will change this country is heading 3rrd world
El Bubsio
Errr okay. Sources for those figures please.
Nick Bowden
Do your research you dullard
El Bubsio
Wow, such hostility over a simple question. As far as I'm aware, the top tax rate in this country is 45% (and that assumes both parents are top wage earners), just wondering where you've pulled the other 30%+ from. If you can't provide simple sources for your post, I can only assume your making it up. P.S. - This is not something I normally pick on, but you might want to check your spelling and grammar before you accuse others of being a dullard.
Nick Bowden
Sorry grammer police
El Bubsio
That's okay. Still waiting for those sources though. P.S. - There's a comma between sorry and grammar
Martin Peacock
Because of a restriction on the size of posting, I have divided my comment into 6 sections. This is part 1 The ongoing situation regarding unaffordable rent levels and the inability of younger people to get onto the housing ladder is a primary cause of the economic decline of the UK. It has been going on for decades. At the most fundamental level it is clearly down to the economic mechanism known as "supply and demand". The demand for housing has gone up in proportion to the steadily increasing population (we are now at over 60 million), but the supply side has trailed far behind. One result is that two defined groups have arisen within the realms of the unhoused, each with a different way of addressing the problem.
Martin Peacock
Because of a restriction on the size of posting, I have divided my comment into 6 sections. This is part 2 One group uses unemployment and wholesale breeding to get a roof over their heads at public expense, and hang the consequences for the country. I suspect that one element of their philosophy is that as far as they are concerned, "the country can pay for the problem it has caused". The result is that significant numbers of people are not only economically inactive, they are also a financial drag on the rest of us. I also suspect that their offspring are learning by their example, so those offspring will form the next generation of the unemployed. And so on, ad infinitum.
Martin Peacock
Because of a restriction on the size of posting, I have divided my comment into 6 sections. This is part 3 The second group is socially more responsible. They delay getting married and producing their offspring, and in many cases they continue to live with their parents well into their 30s or 40s. They breed later and have smaller families, resulting in an ageing population and all that that implies - extra demands on the Health Service and a pensions bill spiralling out of control.
Martin Peacock
Because of a restriction on the size of posting, I have divided my comment into 6 sections. This is part 4 There is also the risk that those with a job and a roof over their head, but struggling to make ends meet, may take a jaundiced view of their own economic situation. If those people take the view that because they cannot buy much for the money they get, they may not be prepared to do much in order to get that money. Disgruntled people going to work but not doing a great deal when they get there is not a recipe for success for the country. Those people need to be "re-gruntled"! (Ok, I'm not a Professor of English, but you get the general idea.)
Martin Peacock
Because of a restriction on the size of posting, I have divided my comment into 6 sections. This is part 5 I'm not a economist. Actually I am a retired electronics engineer, but it is blindingly obvious to me that acceptable and affordable housing is a foundation stone of an economically successful untry, and a safisfied and productive work-force. The ability to provide oneself and one's family with somewhere decent to live brings about self respect. Self respect brings about pride in one's appearance. Pride in one's appearance is part and parcel of pride in one's position in society.
Martin Peacock
In the 4th line of the second paragraph, "untry" should of course be "country".
chris
Everybody wanted the price of houses to continually rise, builders, lenders, agents and most of all The Sellers. Obviously unsustainable at some point even without global effects. This country simply will never allow poeple to buy a bit of land and build a well insulated cheap 'log cabin' or short lifespan Prefab. It would undermine the property market too much.
Martin Peacock
Because of a restriction on the size of posting, I have divided my comment into 6 sections. This is part 6 In order to read this in a logical sequence, first find part 1, then work up the list! I contend that the country will not return to economic success until the housing problem is addressed, quite literally from the ground up. It worked in the 1930s. It can work again. All it will take is a group pf politicians who recognise the problem and resolve to do something about it. And most important of all, they don't stop "doing something about it" until the project has taken on an unstoppable momentum of it's own.
davenlesley
People struggling to keep up with mortgage or rent payments is nothing new. It is something which has been around since the late 60's regardless of which party was in govt. I well remember struggling to pay the mortgage on our flat in the early 70's when the inflation was 25% and mortgage intertest rates reached 15% at one stage. We borrowed from my mum on a monthly basis, repaying her on payday, for years and years. Money was always tight and we didn't have a holiday abroad until 1979, when I was 31 and we went to Paris for a weekend.
peter
Dave - I'm so glad you wrote that - if I had written it, I would have been slammed by the lefties on here which they do on a regular basis - same ones every time. I also remember struggling in the 60s to buy my own house, sometimes borrowing the money - I remember when Wilson devalued the pound and said "It will not affect the pound in your pocket" - Well, it did; and like you it was years before I could afford a holiday with my family - a week in a caravan at Mablethorpe, we couldn't afford to go to Paris. Well done to you Dave - I bet you look back and say "It was worth it"
davenlesley
Peter. Yes it was worth it but by hell it was a struggle at the time. So many people these days seem to think that money being tight is something which has only happened since those nasty tories got in 2 years ago. Well it ain't
Martin Peacock
The 70s were much the same for us. The only difference was we went to Torquay, not Paris. We just got our heads down and did what was necessary to survive financially. It was possible to do that then. I pity the young people who find themselves in a similar situation now. It must be almost intolerable for them.
davenlesley
Martin. I am pleased we are not starting out these days. It frightens me to death when I hear the telephone numbers people pay in mortgage repayments. Some of them are paying more per month than I earned in a year. Scary
t.bulgin
Same here. The people who complain about cuts really have no idea about the true meaning of that word.
stephen
the 70s lets see council house rents affordable , food on the table pubs all full every night, lots and lots of jobs. 2013 no jobs no housing . people starving (food banks) no jobs pubs empty every night . give me the 70s
stephen
Dave 1977 council flat water c/tax rent all in £7 pw
davenlesley
Hi Steven. Jobs plentiful in the 70's ?? Had you said the mid 60's I would have agreed. And as for a council flat, where would a couple with no kids get council accomodation even at £7 pw but what were we earning? Anyway I set my sights slightly higher. Rose coloured specs my friend. The only bit you missed off was saying how wonderful nationalised British Railways was at the time
Michael Hawkins
Dave Nationalised British rail Stale pork pies, strikes, cancellations dirty over crowded trains- how I miss it
david
working people struggle to pay rent ..mortgage but the unemployed ,,,THiS IS WHAT GETS ME..will get theres payed for by the gov,,,meaning londlords get this country to pay there morgages and make millions of us...helping to pay a morgage for people who are working but struggle should go along the lines of this. they have a limit say you had to be paying at leaset 10 years into your morgage.then help them ,but then they owe the gov this money .to be repaid if they sell or die..means they stay in there homes.and dont become homeless.and a burden on the D.S.S and i am sure this would save millions maybe billions
El Bubsio
Unemployed people don't automatically get their rent paid for them. LHA means there are now set limits to the amount that can be paid. Since it's introduction (and obviously to a lesser extent before that) this has meant that thousands of people are now having to plan or undertake a move they can't afford. This plunges them into debt which they often can't afford to repay. I don't know if things have changed, but my mum (who was unable to work for various reasons) was claiming for our mortgage and only received payments to cover the interest, not to pay the original loan. So (assuming that still stands), people don't get their mortgage automatically paid by the state either.
shaun spencer
Its not true that benefit claiments get to stay in their homes whilst having a mortgage paid.their getting their homes repocessed is well.anyway what do propose to do with all these familys if you completely witheld their housing benefit.make them homeless.
shaun spencer
This news item is rather apt to my comment on the pensions page.yet they are are still building £ 250.000 second homes that remain empty for most of the year.tax these and use money to build affordable homes for the locals particuarly starter homes.this will provide jobs is well as relieving the list for council houses or even build more council homes.
shaun spencer
Should tax second homes and there should be a mansion tax.this will help pay for new affordable homes for youngsters to get on the property ladder.and new housing association developments.
movvi
I think being eligible for housing benefit would be the only way many of us could manage if things continue to deteriorate.
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andrew
As a former Building Society Manager, I can look back and see how things have changed for the worse. The situation used to be that you were only allowed to borrow amultiple of your income (usually 2 and a half + some of the second applicants income). I was never allowed to deviate from this and as a result, serious arrears cases were few and far between. The rot set in when the Financial world started to get greedy and allowed people to borrow virtually whatever they wanted on the back of an ever rising property market. The bubble has well and truly burst leaving many families in danger of losing their homes. I'm just glad I'm out of it.
davenlesley
Too right Andrew. We had to save with the Building Society for at least 6 mths before they would even consider us for a mortgage. Then it was usually only 90% of its value. The income rules left us £1700 short on a new build house but it stopped us overstretching ourselves
Michael Hawkins
Credit over the year has become easy to obtain, many have become over committed, with multiple credit card, and short term contracts for phones, sky etc We are must have society where anything can be bought on credit without ever considering how we would pay it back. to save up to buy something is an old fashioned attitude. After the feast comes famine
davenlesley
Michael. You are right. I know what I want and I want it now!!. Credit was far too easy to obtain and although much of the blame lies with irresponsible lenders those who borrowed irresposponsibly are just as culpable. Just wait until interest rates start to creep up and listen for the howls of protest -- and it will happen
movvi
Absolutely. I know people who have a mortgage, car finance, credit cards and loans. These people neither own their car, home, or even the shirt on their back or food in their cupboard. They must never sleep.
Michael Hawkins
We currently have record low Interest rates that have held firm for a number of year Heaven help these people if the interest rates go up many get their priorities wrong, preferring to waste money on consumer goods rather than paying the boring essential I phones, Sky, etc etc taking priority over mortgage and bills. I like most are guilty of buying item because I want it, not because I need it
movvi
Yes, exactly. Just like the pupils I now hear telling us all what they are "getting" for Christmas instead of what they "want". Assumptious and greedy is what many have become, I'm afraid!
Brian Quinn
The answer is simple. Don't live beyond your means.
movvi
I really do believe that too - it's just now my means have been significantly battered! I still live within them though, but it's getting tighter!
andy johnson
8:50am on 4/1/2013
so what you lose your house and maybe the government has to pay your rent which is money lost forever, the solution could be the government pay your mortgage untill a time whe you can afford to, you can then start to payback what the government paid or when you come to sell your home the government get its money back,so at some stage the money comes back where as its gone forever if they pay your rent, simples!!!!!
gengisken1227
10:03am on 4/1/2013
Q: Where does government get it's money from? A: The taxpayer You're advocating the taxpayer (that would be you & me) adopts private liabilty Havn't we been there before with McRuin Brown?
blue side
10:26am on 4/1/2013
gengisken if you think about it which ever way it goes the tax payer picks up the tab. Better to have an interest only deal with an out than have a repossession with an ongoing never ending burden. If we started to think more about our own country than every other there may be money available
shaun spencer
3:45pm on 4/1/2013
Another point to these comments is thst the peaple having their homes repocessed particuarly with children then get put on the council housing list and who pays for this in the long run.
shirley sutton
6:18pm on 4/1/2013
Very true you lose your job and get no help with your mortgage but if you rent they pay your rent - totally biased should help people from this country not keep paying the rent for all the immigrants who keep coming hwre