Cash-strapped families switch £60bn-worth of mortgages to interest-only

originalmiscellany

I have to admit too, we changed to IO last year, and have overpaid more than we ever had. How do they know if you're struggling financially?

Really2

originalmiscellany wrote: »

How do they know if you're struggling financially?

They don'tray boulger said the official number of households in arrears on I/O is 0.7% of all mortgages. That to my mind is not 2/3rds (not like a journalist to get it wrong though )
Add to that people overpaying more than ever before (see kennyboy's post) it hardly paint a picture of 2/3 of people on I/O struggling.
But you will have to get used to the forum, I/O mean you can't afford your house apparently. (even though you are paying it back faster than repayment)

JonnyBravo

originalmiscellany wrote: »

I have to admit too, we changed to IO last year, and have overpaid more than we ever had. How do they know if you're struggling financially?

I guess if they're behind on payments? 2/3 behind on payments seems too high mind, so must be other data as well. Or a guess of course!

I too, like yourself and really2, switched to IO in this period and overpaid massively. Of course it is clear plenty of financially astute people frequent this forum and will have taken advantage of some great (IO) deals in that period but it is disingenuous to proclaim (as some have) that no problem exists. Clearly the picture, as usual, is a shade of grey, not black or white.

originalmiscellany

And I view going IO and offset as a very efficient way of providing a bit of "flex" in the system - one overpays with no charge when the times are good, and if times are going to get tougher in years down the line, you sit it out for a few months - but as you've got a decent buffer, it doesn't affect you that badly. I think the real issue is that banks are so rigid in their mortgages to maximise profits that when a genuine creative offer, offsetting etc comes in people with a bit of nous will go to it, as it gives customers a bit more power than they've ever had before.

Anyway, I look forward to other posts on this topic, always good to get a broad selection of views represented.

Really2

JonnyBravo wrote: »

but it is disingenuous to proclaim (as some have) that no problem exists. Clearly the picture, as usual, is a shade of grey, not black or white.

I agree the problem is there, there will be a hang over of self certs and also be a fair number in their who of lost jobs who have gone down to IO.

So there will be people in trouble with IO mortgages (there will be with people on repayment also) but the 2/3rds figure is way too high.
That would be 29% of all mortgages struggling to repay? (excluding those on repayment), that is far of the 0.7% the guy on the radio said this morning.

Graham_Devon

Really2 wrote: »

They don'tray boulger said the official number of households in arrears on I/O is 0.7% of all mortgages. That to my mind is not 2/3rds (not like a journalist to get it wrong though )

That's not even what the FSA are saying. You are now comparing the entire mortgage market, against this subset made up of those switched to IO since 2007. Absolutely nothing to do with the article.

The 2 thirds relates only to those who have been switched, not the entire mortgage market you have seemingly muddled it all up with for whatever reason.

Talk about disingenuous. Have a read of the following extract from the article. Read whats actually being said, and what you are, for whatever reason, desperately trying to twist it into, all to say the article is actually wrong, because you say so.

The FSA disclosed to The Telegraph that, between the onset of the financial crisis in the third quarter of 2007 and the final three months of last year, the value of interest-only mortgages increased by £99bn and the number of borrowers rose by 369,370.

Some of those will have been new deals, but FSA sources confirmed the bulk were due to "forbearance" – as banks move homeowners on to more affordable payment plans to avoid defaults.

Although the regulator does not break out precise figures on new lending and "forbearance", the data shows that around two-thirds of the increase came from struggling households.

I'm amazed you are still trying to twist it.

JonnyBravo

Really2 wrote: »

I agree the problem is there, there will be a hang over of self certs and also be a fair number in their who of lost jobs who have gone down to IO.

So there will be people in trouble with IO mortgages (there will be with people on repayment also) but the 2/3rds figure is way too high.
That would be 29% of all mortgages struggling to repay? (excluding those on repayment), that is far of the 0.7% the guy on the radio said this morning.

Seems high to me but don't confuse the maths. They're saying 2/3 of the people who moved to IO between Q3 2007 and Q4 2010. Not all IO mortgages.
2/3 of 369k mortgages it seems. There is also no measure of how severe "forbearance" is or of those who have moved out of difficulty (eg a new job etc) since switching.

JonnyBravo

Bohdy wrote: »

Yes that is right, everythings roses, what crisis?

What does poshbird think about it all?

Pimperne1

Really2 wrote: »

I agree the problem is there, there will be a hang over of self certs and also be a fair number in their who of lost jobs who have gone down to IO.

So there will be people in trouble with IO mortgages (there will be with people on repayment also) but the 2/3rds figure is way too high.
That would be 29% of all mortgages struggling to repay? (excluding those on repayment), that is far of the 0.7% the guy on the radio said this morning.

Whatever the figure these people are right to explore every avenue available to them to help them keep hold of their houses. Clearly it is the biggest investment they will ever make and if they can switch to IO (agree the price now and pay for it in 25 years time) then that is a very sensible option.

There is clearly a measure of frustration by bears that these are the distressed seller properties that should be falling into their hands but if they are honest and decent people then they should accept that one person's misery is a poor way of enriching oneself.

Really2

JonnyBravo wrote: »

Seems high to me but don't confuse the maths. They're saying 2/3 of the people who moved to IO between Q3 2007 and Q4 2010. Not all IO mortgages.
2/3 of 369k mortgages it seems. There is also no measure of how severe "forbearance" is or of those who have moved out of difficulty (eg a new job etc) since switching.

Sorry I, only skimmed so overlooked the 2/3rds being the amount in trouble since 2007 switching to IO. So I agree the 2/3rds is more possible now looking at it like that (but still unsure how they get to the figure)

Your reply got my response because you are polite in making a point unlike others.

Graham, I over looked it, it was not spin. But I am not the only one questioning the data.
http://www.beatmydebt.com/news-articles/families-switch-60-billion-pounds-worth-of-mortgages-to-interest-only.htm

He added that the data demonstrated a large number of homeowners are not re-mortgaging but simply changing the terms of their existing deal. An FSA spokesman confirmed revised terms do not show up as "new lending" but the changes are visible in the "stock" numbers.

Mr Winder added: "Non-discretionary spending [such as food, petrol and tax] is rising considerably more quickly than incomes. Therefore, there is a natural incentive to move to interest-only products."