One in five homes for sale because owners unable to afford mortgage repayments

chucky

Max_Headroom wrote: »

Twice as vulnerable, or half as vulnerable?

If a single income household suffers a job loss then that's 100% of income gone. If a dual income household suffers a job loss it's only half the income stream gone.

I agree with your post though, it's not (just) about interest rates, it's about the sheer mind boggling amount of debt that's out there and how that will be repaid, especially now incomes are dropping.

agree with this Max - but i'd see not the amount of debt as the problem but debt-affordability.

there can be x amount of mind-boggling debt out there, but if's affordable it's not a problem.

for many this won't be the case.

pickles110564

Shock - 4 out of 5 homes are being sold but their owners can afford their mortgage repayments.:rotfl:

Cannon_Fodder

Unfortunately a growing number of people are unable to sell before problem gets really bad;

http://newsvote.bbc.co.uk/1/hi/business/7741172.stm

"Repossessions of homes up by 12%"

"The number of borrowers in arrears also went up compared with the previous quarter, by 8% to 168,000."


Yeah, I think the worst is past, now...

Really2

Cannon_Fodder wrote: »

I think the "double" vulnerability can be seen like the lottery - two tickets gives you double the chance of winning...

If there is a finite number of redundancies during a recession, having two jobs in the same household makes that household twice as likely to be hit...

.

How do you work that out. They may be more likely to loose one income but not both.

Buying two lottery does not make it twice as likely to win the jackpot twice (unless you are a loon and put the same numbers on)

So two people are half as likely to loose 100% of their income.

WTF?_2

Max_Headroom wrote: »

Twice as vulnerable, or half as vulnerable?

If a single income household suffers a job loss then that's 100% of income gone. If a dual income household suffers a job loss it's only half the income stream gone.

Yes - but you still have to make the mortgage payments every month which don't reduce because the income stream reduced.

If you borrowed a sensible multiple of the joint salary, you should be able to get by should one person lose their salary. Certainly if you put by some savings it would give you a decent buffer to get things sorted before finances became critical.

If you borrowed a stupidly high multiple, you are very quickly financially stuffed should income drop. Chances are if you borrowed a huge multiple in the first place, you had very little chance to make savings for emergencies too as repayments ate your monthly income.


This is why the traditional multiple for joint salaries (2.5x) is lower than the multiple for single salary (3.5x). It's common sense but there has been more than one argument on this board about it with people who didn't see a problem with borrowing massive multiples of salary (joint or single) with a large LTV.

Borrowing 4x joint or more, as was exceptionally common during the boom, is putting yourself in a very precarious position indeed. Yet lots of people quite happily did so with little thought for the consequences should the economy worsen at some stage in the 20 or so years following getting the mortgage.

I agree with your post though, it's not (just) about interest rates, it's about the sheer mind boggling amount of debt that's out there and how that will be repaid, especially now incomes are dropping.

Yes - take away 'the interest rate problem' (and don't ask any questions about how it's done) and the underlying problem of people - and of course governments - being saddled with massive amounts of debt is revealed.

The solution will be the tried and tested one - inflation. At the moment though the govts are cacking themselves because the market is exerting deflationary forces as a quite natural response to the non-stop pumping of credit over most of a decade. Deflation of course makes the underlying problem even more horrendous.

Cannon_Fodder

I guess there will be those so close to the brink, that even a brief shutdown could be the straw to break the back...

http://newsvote.bbc.co.uk/1/hi/business/7741269.stm

"Honda Swindon closing for 50 days"

Really2

Cannon_Fodder wrote: »

I guess there will be those so close to the brink, that even a brief shutdown could be the straw to break the back...

http://newsvote.bbc.co.uk/1/hi/business/7741269.stm

"Honda Swindon closing for 50 days"

They have been told they will not lose their jobs. Is it without pay? It does not say.

borntobefree

These are the real figures of repossessions out today.

"The number of repossessions this year now stands at 30,200.
This is higher than the 26,200 for the whole of last year" BBC


Hardly carnage. How many millions of homes are there?

StevieJ

abaxas wrote: »

Yes, the people who can pay will.

However 60pw on the dole doesnt pay much of a mortgage.

Providing they can survive the qualifying period and switch to a interest only, dole will pay.

chucky

If one in five home owners cannot afford their repayments, I wonder how many renters this would also impact. Probably more as 40% of homeowners do not have mortgages on their homes

pretty sad either way if you can't afford repayments or the rent and have to leave where you live.