Mortgage costs soar despite rate freeze

chucky

Graham_Devon wrote: »

I'm sure I read it was 8% of the mortgage market in arrears, meaning 92% are not.

You've taken the amount of households, and a lot of them will own and not have a mortgage to be in arrears.

i think that you're wrong Graham and so is Cleaver too but it's ok he's a HPI cheerleader

the market average is 2.5% of mortgages or thereabouts in arrears.

Northern Rock had something like 4.5% and someone like Abbey had 1.4% in arrears.

Graham_Devon

chucky wrote: »

i think that you're wrong Graham and so is Cleaver too but it's ok he's a HPI cheerleader

the market average is 2.5% of mortgages or thereabouts in arrears.

Northern Rock had something like 4.5% and someone like Abbey had 1.4% in arrears.

Yer, like I said, not sure if it was right.

Spose we could work it out. 300,000 in arrears of 3 months or more. Anyone know the total mortgages out there?

chucky

Graham_Devon wrote: »

Yer, like I said, not sure if it was right.

Spose we could work it out. 300,000 in arrears of 3 months or more. Anyone know the total mortgages out there?

at a guess 10.5 million mortgages

25 million households - 70% owner occupeid = 17.5 million properties
40% of property in the UK has no mortgage, so 17.5 million minus 40% = 10.5 million mortgages

Graham_Devon

Errrr, 2.8%?

When I said "we" could work it out, was kinda hoping someone else might

Rinoa

From CML:

[FONT=&quot]What’s wrong with the months in arrears measure?[/FONT]
To calculate the number of months in arrears, we simply divide the accumulated arrears by the current monthly payment. So, as interest rates fall, the same value of accumulated arrears represents a higher number of monthly payments. Because official interest rates have fallen so far and so fast, beginning 2008 at 5.5% but now standing at 0.5%, the effect over the course of 2008/2009 is particularly pronounced.

For example, a borrower with a £100,000 interest-only mortgage might have been paying a rate of around 7.5% at the beginning of 2008, making their contractual monthly payment £625. But by the spring of this year, the same borrower might have seen their rate fall to 4.5%, with their contractual payment only £375. If this borrower fell £1,500 behind on their mortgage, at the beginning of 2008 this would have been equal to 2.4 months arrears. But by the spring of this year, £1,500 would equate to 4 months arrears. However, using the “percentage of balance” figure, the borrower would be 1.5% in arrears in either period.

Because there are many households with a small amount of arrears, and fewer households with large amounts of arrears, lower mortgage rates tend to inflate the reported number of arrears cases in most arrears bands.
Although this doesn’t make the number of months measure “wrong”, it is very important to be aware of the artificial impact - caused purely by this arithmetic effect - on the reported numbers during a period of sharply falling mortgage rates.

ukcarper

Graham_Devon wrote: »

Errrr, 2.8%?

When I said "we" could work it out, was kinda hoping someone else might

looks about right to me

Graham_Devon

ukcarper wrote: »

looks about right to me

Cool. Maybe the stuff I read was those in arrears, rather than those in arrears of 3 months or over.

chucky

Graham_Devon wrote: »

Cool. Maybe the stuff I read was those in arrears, rather than those in arrears of 3 months or over.

it's probably all those in arrears so those 3 months and those in 6 months.

Graham_Devon

chucky wrote: »

it's probably all those in arrears so those 3 months and those in 6 months.

I would have thought those in 6 months arrears would have fallen into the "3 months and over" group?

I'd assume there are more in up to 2 months arrears than there are in over 3 months?

Cleaver

Graham_Devon wrote: »

I'm sure I read it was 8% of the mortgage market in arrears, meaning 92% are not. (not saying this is right, just sure thats what I read somewhere....).

You've taken the amount of households, and a lot of them will own and not have a mortgage to be in arrears. So the numbers for those in arrears look better, but include those who can't even be in arrears.

I said that if 300,000 houses are in arrears and there are 25 million households it means that 98.2% of houses are not arrears. It doesn't matter if the houses not in arrears are owned-outright, mortgaged or have never had a mortgage on them. I was just saying that if 300,000 houses are in arrears, when you drive around the streets of our snowy nation it means that 98.2% of the houses are either paid for or being paid for (based on the two stats used).