How millions are using credit cards to pay mortgages

stringsmk2

Think of all the airpoints and rewards they would be getting.

Wish I could use my CC to pay my mortgage with out drawing cash down

hillcats

I would pay by credit card if I was allowed also.
Think of all those extra clubcard points we could get.

We are extremely disciplined with the credit card account if we cant afford it we dont buy it, and we ALWAYS pay in full every month.

Conrad

And yet less than 1% of homeowners are repossessed, yada yada. Even when rates were 10% in the early nineties less than 2% were repo'd.

Nothing to see here, move along

treliac

Conrad wrote: »

And yet less than 1% of homeowners are repossessed, yada yada. Even when rates were 10% in the early nineties less than 2% were repo'd.

Nothing to see here, move along

I would suspect a lot more would have been if interest rates hadn't been kept at an all time low for so long. Plus, I believe the help given towards paying mortgage interest via benefits is more accessible than it was 20 years ago.

RenovationMan

treliac wrote: »

I would suspect a lot more would have been if interest rates hadn't been kept at an all time low for so long. Plus, I believe the help given towards paying mortgage interest via benefits is more accessible than it was 20 years ago.

I dont think those people who are on the edge are the ones with the low rates. From lurking on the DFW board, they seem to be on 90 - 100% LTV mortgages with the likes of Northern Rock and some sub-prime lenders. Their rates are in excess of 6% and the lenders must be raking it in at their expense. If rates rise, these lenders will absorb the rises and take less of a profit, knowing that rates of 8 to 10% would cause them political problems, bad publicity and on the whole be counter productive as people start to default on mortgages.

ukcarper

treliac wrote: »

I believe the help given towards paying mortgage interest via benefits is more accessible than it was 20 years ago.

I'm not so sure about that.

lemonjelly

treliac wrote: »

I would suspect a lot more would have been if interest rates hadn't been kept at an all time low for so long. Plus, I believe the help given towards paying mortgage interest via benefits is more accessible than it was 20 years ago.

Like ukcarper, I feel this isn't the case now - although when the labour government suspended the pretty harsh rules, smi was more accessible.

Now we're back to the old rules - 39 weeks before you get help, & that is interest only.

My feeling is that repossessions are lower than they would normally be, because banks are not taking that repossession action. I am not 100% why that is the case. It could be they are worried about spooking the market. It could be they are already sitting on a large number of vacant properties & are aware of the impact of putting all these on the market suddenly. It could be pressure from the government. I don't know.

What I do know is that I (& colleagues in the advice sector) are seeing people with 9 months, 12 months & even larger levels of mortgage arrears, yet the lender isn't currently taking repossession action. We find this unexpected, as historically, 2 months arrears is a mandatory reason for possession to be given to the lender.

What is the difference now?

chucky

lemonjelly wrote: »

My feeling is that repossessions are lower than they would normally be, because banks are not taking that repossession action. I am not 100% why that is the case.

banks are there to make profit for shareholders and not lose money.

it's probably makes financial sense for the bank not to repossess and keep the people in the property.

julieq

It'll be a combination of things:

1) low default rate anyway so not a particular risk to the bank, not many repossessions.
2) cost of the debt to the bank is low because of cheap money, situation can be deferred
3) no prospect of crash and some prospect of growth, so debt is still secured, arguably counterproductive to force sales.
4) politically no bank will want to be seen as throwing hard working unfortunate families out of their homes unless there's a good reason to

There are still repossessions though. Just it's not a big part of day to day business for the banks, unlike it is for crash obsessives.

AD9898_2

treliac wrote: »

I would suspect a lot more would have been if interest rates hadn't been kept at an all time low for so long. Plus, I believe the help given towards paying mortgage interest via benefits is more accessible than it was 20 years ago.

Come now Treliac, don't be mean and let the truth and common sense come between a VI and his post.