Repossessions: 5 million at risk

macaque_2

The latest repossession statistics from the CML come laden with health warnings. Predictions for repossessions this year is 53,000 but what is the real downside risk?

The threat to repossessions is linked to jobs, disposable income and intererst rates. We have interest rates at their lowest level for 300 years and under growing pressure from inflation. The new government are about to grasp the nettle of government spending. This has huge implications for incomes and jobs.

In the 12 months to March 2010 Public sector net debt (excluding financial interventions) rose by £154.6 b. Halting this runaway debt immediately would add 5 million to the unemployment numbers. The alternative is to increase taxes. This will severely impact on disposable incomes and increase unemployment in the private sector. Either way, 5 million home owners are in no position to cope.

The housing charity Shelter has today warned that up to 5 million homeowners in the UK can ill afford the additional mortgage cost if UK base rates were to rise. This is a terrifying situation for the UK housing market and is one which the UK government is certain to take notice of.

More and more people in the UK are simply getting by on a day-to-day basis and are not able to look forward to the future.

http://www.financialadvice.co.uk/news/mortgages/88640-shelter-warns-of-impending-housing-crisis.html

HAMISH_MCTAVISH

macaque wrote: »

Predictions for repossessions this year is 53,000 but what is the real downside risk?

53K is far better than the 75K projected, and 90K in the last recession.

Great result.

The threat to repossessions is linked to jobs, disposable income and intererst rates. We have interest rates at their lowest level for 300 years and under growing pressure from inflation. The new government are about to grasp the nettle of government spending. This has huge implications for incomes and jobs.

BoE projected no interest rate rises this year, and quite possibly for the next 2 or 3 years. There's a thread with the details.

Base rates above 1% are extremely unlikely for at least the next 3 years, and it could be as much as 5 years.

Disposable income is about to INCREASE for 25 million workers in the emergency budget.
https://forums.moneysavingexpert.com/discussion/comment/32800023#Comment_32800023

The 6 Billion in extra spending cuts will result in around 40,000 positions being lost, according to the efficiency experts hired by the Tories. Cameron has already pledged to do this via natural attrition, with no redundancies.

Your hyperbolic rants are therefore as unlikely as ever to come true.

mbga9pgf

Base rates wont rise Hamish, Market rates will...

Any decision to raise IRs will be based upon how sensitive the nation is to IR rises. I would say the population at large is very sensitive to any rise and only a 1% rise over the next few years would be enough to push lots of people over the edge and kill demand.

The problem comes with SVRs.

Asheron

Ooooo debt is such an evil thing

Harry_Powell

mbga9pgf wrote: »

Base rates wont rise Hamish, Market rates will...

Any decision to raise IRs will be based upon how sensitive the nation is to IR rises. I would say the population at large is very sensitive to any rise and only a 1% rise over the next few years would be enough to push lots of people over the edge and kill demand.

The problem comes with SVRs.

I thought that a lot of people were happy to be coming of fixed deals and were sticking with the SVR for now because they were so much cheaper?

I know several work colleagues have a rueful smile when I mentioned the other day that the BoE had decided to retain the 0.5% base rate. It seems that the majority around the office were on fixed rates averaging at 6% that were taken out a few years back. All of them were gleefully awaiting the day when their fixed deal ends and they can benefit from the low rates offered on the SVRs.

Do you really believe that BoE rates of 1.5% would bring down the country? I mean, really? Nah, you're just joking aren't you? No? Really?????!!!! Aw, go on, you're just winding me up. Lol, you had me going there for a minute! <playfully punches mbga9pgf on the arm>. You joker, you.

mbga9pgf

Harry_Powell wrote: »

I thought that a lot of people were happy to be coming of fixed deals and were sticking with the SVR for now because they were so much cheaper?

I know several work colleagues have a rueful smile when I mentioned the other day that the BoE had decided to retain the 0.5% base rate. It seems that the majority around the office were on fixed rates averaging at 6% that were taken out a few years back. All of them were gleefully awaiting the day when their fixed deal ends and they can benefit from the low rates offered on the SVRs.

Do you really believe that BoE rates of 1.5% would bring down the country? I mean, really? Nah, you're just joking aren't you? No? Really?????!!!! Aw, go on, you're just winding me up. Lol, you had me going there for a minute! <playfully punches mbga9pgf on the arm>. You joker, you.

I think for a lot of people that have lost the main income in the house, it could be close. raising interest rates by 1% would increase interest on some mortgages out there by more than 100%!

With the debt overhang of consumer debt in the mix, it wont be pretty.

chucky

mbga9pgf wrote: »

Base rates wont rise Hamish, Market rates will...

Any decision to raise IRs will be based upon how sensitive the nation is to IR rises. I would say the population at large is very sensitive to any rise and only a 1% rise over the next few years would be enough to push lots of people over the edge and kill demand.

The problem comes with SVRs.

Libor and Swap rates aren't going no-where at the moment

why would mortgage rates go up?

mbga9pgf

SLS.

300 Bill shortfall as soon as BOE support ends, they have to find 300 billion between now and 2014.

How do you think this will affect market liquidity and rates perchance?

chucky

mbga9pgf wrote: »

SLS.

300 Bill shortfall as soon as BOE support ends, they have to find 300 billion between now and 2014.

How do you think this will affect market liquidity and rates perchance?

by removing however many billion off that is needed off their balance sheets by clearing CDS and IRS through clearing houses instead of being OTC and one counterparty holding the risk or position...

that's a big part of the answer

Emy1501

Harry_Powell wrote: »

I thought that a lot of people were happy to be coming of fixed deals and were sticking with the SVR for now because they were so much cheaper?

I know several work colleagues have a rueful smile when I mentioned the other day that the BoE had decided to retain the 0.5% base rate. It seems that the majority around the office were on fixed rates averaging at 6% that were taken out a few years back. All of them were gleefully awaiting the day when their fixed deal ends and they can benefit from the low rates offered on the SVRs.

Do you really believe that BoE rates of 1.5% would bring down the country? I mean, really? Nah, you're just joking aren't you? No? Really?????!!!! Aw, go on, you're just winding me up. Lol, you had me going there for a minute! <playfully punches mbga9pgf on the arm>. You joker, you.

You only need 3-5% of people to struggle to pay their mortgage for their to be a crash. Rates at 1.5% would not really make much difference but rates at 3% wih all the cuts over the next fews years will unless we see a dramatic improvement in the economy over the next few years.

You also got to remember that those who will struggle are those who took out subprime, Liar Loans, BTL's with no idea what they were doing.

chucky

Emy1501 wrote: »

You only need 3-5% of people to struggle to pay their mortgage for their to be a crash. Rates at 1.5% would not really make much difference but rates at 3% wih all the cuts over the next fews years will unless we see a dramatic improvement in the economy over the next few years.

You also got to remember that those who will struggle are those who took out subprime, Liar Loans, BTL's with no idea what they were doing.

if they could afford when they took out the mortgages when rates were 5%. why would they struggle when rates were 3%? that's still less than they were originally paying.

i'm not saying that nobody will be affected by rates rises btw...