Mortgage defaults rising...

[Vitamin c]

https://news.sky.com/story/biggest-incr ... s-12920424

Large increase in defaults as brits struggling to pay mortgages.
Will it lead to folk losing their homes .

The big question is will intrest rates rise again.

[GillyBee]

And as Jansman always says. "The most useful prep is finances".
NOT spending the last ten percent of your income every month makes all the difference when life or inflation intervenes and makes the choice for you.

[jansman]

Back in 1990 our mortgage was 15.25% interest rate. When it came down to 8% by about 93/4 we thought it was great! At the beginning we earned about £250 a week BETWEEN us. These days it’s £200 a day for many! But the current’moaners’ still want holidays,latest phone,subscriptions blah blah. Back then we had and did none. The house came first! An old lady ( customer) said “rent or mortgage first,food next,everything else last”. Not wrong.
When I lost my job early on,I was given 3 month’s default upon the mortgage. Now it’s minimum of a year!

Been there before,and this is nothing compared to the 70’s ,80’s and 90’s . From 2000 we had a world that went cheap. Very cheap,and now it’s wanted back again! Guess what? This is reality.

[Frnc]

Interest rates are being used to combat inflation. There are 3 components to inflation - profits (mostly corporate), wage rises, and import costs. The biggest component in the last couple of years is profits. Interest rates only work on the wage rise component.

[Vitamin c]

Yes for some giving up the things we take for granted is the way ,but I would guess that many of those in trouble have already done this because the other options is sell or lose their home .

The real big one is how long this lasts and will rates continue to rise.

These people are struggling and it's only the start .

[korolev]

Back in 1990 our mortgage was 15.25% interest rate. When it came down to 8% by about 93/4 we thought it was great! At the beginning we earned about £250 a week BETWEEN us. These days it’s £200 a day for many! But the current’moaners’ still want holidays,latest phone,subscriptions blah blah. Back then we had and did none. The house came first! An old lady ( customer) said “rent or mortgage first,food next,everything else last”. Not wrong.
When I lost my job early on,I was given 3 month’s default upon the mortgage. Now it’s minimum of a year!

Been there before,and this is nothing compared to the 70’s ,80’s and 90’s . From 2000 we had a world that went cheap. Very cheap,and now it’s wanted back again! Guess what? This is reality.

That's a commonly held, but somewhat simplistic, viewpoint amongst the "older generation". Whilst it's true that we had much higher interest rates in the 80's the cost of accommodation (whether rented or mortgaged) as a proportion of salary was MUCH lower so we had a fair bit of "slack" in the finances.
As an example, I bought a 1 bedroom garden flat in Brighton in 1987. It cost £32k and my salary at the time was about £11k so 3x my income.
I just did a rightmove search and there are two similar flats in the same street, at £280-300k and £320k. The salary for the job I was doing is now about £30k. that's TEN TIMES the salary.
Rent has seen a similar increase.
There is little, if any, slack in peoples' finances these days.

[Vitamin c]

Back in 1990 our mortgage was 15.25% interest rate. When it came down to 8% by about 93/4 we thought it was great! At the beginning we earned about £250 a week BETWEEN us. These days it’s £200 a day for many! But the current’moaners’ still want holidays,latest phone,subscriptions blah blah. Back then we had and did none. The house came first! An old lady ( customer) said “rent or mortgage first,food next,everything else last”. Not wrong.
When I lost my job early on,I was given 3 month’s default upon the mortgage. Now it’s minimum of a year!

Been there before,and this is nothing compared to the 70’s ,80’s and 90’s . From 2000 we had a world that went cheap. Very cheap,and now it’s wanted back again! Guess what? This is reality.

That's a commonly held, but somewhat simplistic, viewpoint amongst the "older generation". Whilst it's true that we had much higher interest rates in the 80's the cost of accommodation (whether rented or mortgaged) as a proportion of salary was MUCH lower so we had a fair bit of "slack" in the finances.
As an example, I bought a 1 bedroom garden flat in Brighton in 1987. It cost £32k and my salary at the time was about £11k so 3x my income.
I just did a rightmove search and there are two similar flats in the same street, at £280-300k and £320k. The salary for the job I was doing is now about £30k. that's TEN TIMES the salary.
Rent has seen a similar increase.
There is little, if any, slack in peoples' finances these days.


÷÷÷÷÷÷÷÷
Simplistic..

Well spotted...

[jansman]

Back in 1990 our mortgage was 15.25% interest rate. When it came down to 8% by about 93/4 we thought it was great! At the beginning we earned about £250 a week BETWEEN us. These days it’s £200 a day for many! But the current’moaners’ still want holidays,latest phone,subscriptions blah blah. Back then we had and did none. The house came first! An old lady ( customer) said “rent or mortgage first,food next,everything else last”. Not wrong.
When I lost my job early on,I was given 3 month’s default upon the mortgage. Now it’s minimum of a year!

Been there before,and this is nothing compared to the 70’s ,80’s and 90’s . From 2000 we had a world that went cheap. Very cheap,and now it’s wanted back again! Guess what? This is reality.

That's a commonly held, but somewhat simplistic, viewpoint amongst the "older generation". Whilst it's true that we had much higher interest rates in the 80's the cost of accommodation (whether rented or mortgaged) as a proportion of salary was MUCH lower so we had a fair bit of "slack" in the finances.
As an example, I bought a 1 bedroom garden flat in Brighton in 1987. It cost £32k and my salary at the time was about £11k so 3x my income.
I just did a rightmove search and there are two similar flats in the same street, at £280-300k and £320k. The salary for the job I was doing is now about £30k. that's TEN TIMES the salary.
Rent has seen a similar increase.
There is little, if any, slack in peoples' finances these days.

To a degree yes you are correct. However,our mortgage was 4 times our income. These days the average mortgage is 185,000 and the average wage is between £32,000 and £38,000. As *most* mortgages are taken by couples,wages will be a similar proportion to mortgages. Let’s say 2x £38,000( and believe me ,our children and their partners earn a LOT more!) It’s a 152 grand.

When I hear what folks earn,it’s almost like a lottery win!

However,back in the day we had no car,no holidays and our honeymoon was a new roof. That honeymoon we jokingly took 25 years later! Prices in 1990 were expensive. People think it’s dear now,that they are ‘new’ inflation victims, but as I said in the last post,inflation was part of life in the 70’s,80’s and 90’s. In fact it’s reckoned that the food expenditure in the 70’s was 30% of the average income! Without my dad keeping poultry,rabbits,shooting and veg growing,times would have been tougher still. Half our village lived like that.

Now we are hearing moaning about inflation and how hard living is. Will that be the cost of holidays ,the latest mobile phone and *service* providers,or TV subscriptions? Yes there are low incomes and high rents,but it was like that when I was brought up. I was the first in our family to have a mortgage. My dad ,bless him ,was scared half to death for us. The amount of debt!

But the amount of debt people take out now? One of her colleagues has remortgaged for 12,000 to take the children to Florida for two weeks. WHAT! My wife and I never have all our married lives ,except for a new car when we could afford to pay it back. That was 14 years in,and to that point we had no car at all! Paying the house came first. I earned a very moderate wage,but did side jobs,had a small holding and shot and hunted a lot! My wife took the time to bring our children up over twelve odd years . People won’t do that now ,instead they complain about the cost of childcare!
I was paid weekly,and when money was accounted for,we had four quid left! But we got by.
Our youngest daughter has a partner who has been made redundant. He wants a job like last that paid £48000 per year. Cannot get one. Daughter can cover the cost,but it’s a bit tight - and her rent has gone up- but it can be covered. My wife ,bless her, told him to get off his ar*se and take a minimum wage to SURVIVE. And that is the trouble with society today; they want it all,housing,holidays,cars and The Image of success too. They won’t make do and get by ,because it’s apparently somehow, someone else’s fault.
Right now,as a result of my illness,my wife works part time,( to help care and transport me frequently to) and I claim disability benefits that I have paid 40 + years tax for. Our income is below what outfits like Rowntree - indeed government too, consider is average! But we are quite comfortable. We have always lived through expensive times. Always. We are survivors,not modern whingers.

Rant over.

[diamond lil]

I'm another one gobsmacked at the high wages some people earn now. But they live up to the max possible, and sooner or later they hit a problem and the whole lot goes. I remember seeing young lassies parking very expensive cars in the underground garage at RBS headquarters in Edinburgh - then shortly after that came the crash, and they and the cars all disappeared and did not come back..
Re childcare I sometimes think it's a huge con. The amount of stress and hassle involved in hauling toddlers out very early in the morning to (expensive) childcare, then paying for pre- and after- school clubs for the older ones - ridiculous. Might work out better just taking time off work and then going back when they're at high school - even if it means starting again at a lower wage rate and working up. I see it in my son's family where my DIL works at a high powered job - she hardly ever gets time to sit down at home and the kids never see her.
And (finally lol) I always swore I would never ever buy a house. The kind of jobs my husband worked (crane driver in docks & shipbuilders) couldn't be depended on for 25 years to pay a mortgage. And that's why council housing was invented We had many spells of unemployment and strikes but we always had nice houses without worry. I think now the pressure really is on them and they dont have the options we had - which goes against most people's picture of the past.

[Frnc]

It will be tough, but eventually when people have paid their mortgage off, they have free accomodation and a valuable asset. The problem is not enough social housing has been built in recent decades, and a lot of it was sold off. So there's a waiting list of something like a million households. Many will never get one. And house prices are are astronomical. I just got a rough figure for mine off Zoopla. It's gone up 500% in 23 years. My previous one, which I bought in the mid 80s, has gone up about 12 x.