Rate rise could push homeowners into arrears

wotsthat

The charity dealt with 90,000 homeowners looking for help in 2010, who owe an average of 30,160 in unsecured debt on top of their mortgages.

Research found that a 2% increase in mortgage rates would lead to a £307 rise in monthly mortgage payments for clients who are already experiencing financial difficulties.

An independent survey showed that rate increases would have a limited effect as total mortgage debt is reducing.

If however you have, a (roughly) £185,000 mortgage, an additional £30,000 in unsecured debt and you are already in trouble then a rate rise will be unwelcome.

It's data like this that means we won't be seeing 3.5% base rates anytime soon.

ukcarper

If you read link it says they also have £30k in unsecured debt so how relevant are they to the majority of mortgage holders. A £150k mortgage over 25 years at 4% would rise £177 a month if increased to 6%

ess0two

replumbed wrote: »

Did we expect the financial crises. ok, many bears did, but did the general population?

?? You've lost me,does the current position with the economy warrant a rate rise.

ess0two

ukcarper wrote: »

If you read link it says they also have £30k in unsecured debt so how relevant are they to the majority of mortgage holders. A £150k mortgage over 25 years at 4% would rise £177 a month if increased to 6%

Did'nt read the link,seems the OP posted his own VI.

Graham_Devon

ukcarper wrote: »

If you read link it says they also have £30k in unsecured debt so how relevant are they to the majority of mortgage holders. A £150k mortgage over 25 years at 4% would rise £177 a month if increased to 6%

It's pretty irrelevant really.

People will struggle for a variety of different reasons. Be that loss of job, loss of hours, unsecured debt, extra costs.

If we exclude these subsets of people from total mortgage holder, of course, we can paint a nice picture.

But the problem remains that they are still mortgage holders....whatever the reason for their struggles may be.

wotsthat

ukcarper wrote: »

If you read link it says they also have £30k in unsecured debt so how relevant are they to the majority of mortgage holders. A £150k mortgage over 25 years at 4% would rise £177 a month if increased to 6%

You're not meant to look at the article or analyse the data otherwise the doomsday message of massive increases in arrears starts to fall apart.

There wasn't a press release on the CCCS site. Maybe it will appear soon so we can see the data that they used.

ukcarper

Graham_Devon wrote: »

It's pretty irrelevant really.

People will struggle for a variety of different reasons. Be that loss of job, loss of hours, unsecured debt, extra costs.

If we exclude these subsets of people from total mortgage holder, of course, we can paint a nice picture.

But the problem remains that they are still mortgage holders....whatever the reason for their struggles may be.

Your off again Graham the rise is 55% because they are on interest only they a probably on interest only because they are in difficulty. The same 2% rise will increase a repayment mortgage by £177 a month, which is a big impact, but there are a lot of ways people can reduce their outgoings in preference to losing their home. They might not want to make the savings but as people have done in the past they will if the alternative is losing their home.

wotsthat

Graham_Devon wrote: »

It's pretty irrelevant really.

People will struggle for a variety of different reasons. Be that loss of job, loss of hours, unsecured debt, extra costs.

What's irrelevant - the original premise that arrears will markedly increase if rates rise (that withstood about 30 seconds scrutiny). Or maybe that we're anticipating rates 2% above where we are now?

People will struggle for a variety of reasons but I thought you wanted to talk about rates

Posting it up as this is often discussed, and argued that interest rate rises will/won't have an impact.

DervProf

replumbed wrote: »

the debt junkies fear interest rate rises. and will do everything they can to say interest rates should stay low. they don't want to face the truth, they overpayed for homes and other stuff.

Are you any relation to Mr "Thank You" Rewired ?

DervProf

Like I`ve said before, although low interest rates have a (slight) negative effect on my savings and don't help with my debt (I have none), it's worth it to not have the fear of interest rate rises.