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

shortchanged_2

Interesting to see some figures coming out at last. Where's julieq by the way?

Graham_Devon

Really2 wrote: »

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

Others handed the data to you on a plate, and quoted precisely what was being talked about. But just got accused of twisting it by el chuckio, to which you thanked him and argued against what was quoted

chucky

Graham_Devon wrote: »

Others handed the data to you on a plate, and quoted precisely what was being talked about. But just got accused of twisting it by el chuckio, to which you thanked him and argued against what was quoted

don't involve me in your tiresome obsession please.

there is a huge amount of mortgage repayment taking place deny that again if you wish.

Generali

Net outstanding secured debt (mortgages) increased by £700,000,000 in the year to end April 2011 (link).

New loans for purchases (ie not remortgages) in April 2011 totalled £6,200,000,000 (link).

Thus £5,500,000,000 was net repaid in April 2011.

chucky

Generali wrote: »

Net outstanding secured debt (mortgages) increased by £700,000,000 in the year to end April 2011 (link).

New loans for purchases (ie not remortgages) in April 2011 totalled £6,200,000,000 (link).

Thus £5,500,000,000 was net repaid in April 2011.

which explains why the gross lending figures released each month are always the lowest since Arsenal had 4 English players in the starting 11.

Pete111

chucky wrote: »

don't involve me in your tiresome obsession please.

there is a huge amount of mortgage repayment taking place deny that again if you wish.

Yep. Im one of those on an IO/offset and it's the best mortgage we;ve ever had. We've overpaid or offset north of 100k in the last 18 months. To get a similarly advantageous savings rate (after tax) we would be needing 6-7% so it's a real no brainer and totally flexible. ie if I need that 100k back in my current account I can get it - no bother.

Of course being on an IO mortgage and all, I basically weep myself to sleep every night with the worry...

LydiaJ

Another article about similar things:
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8548745/Banks-accused-of-using-mortgage-debt-leniency-to-flatter-numbers.html

The regulator fears that "where [forbearance] is provided without due care or understanding of the impacts, it has potentially adverse implications for the customer". In one instance, the FSA said, "more than 95pc of customers requesting a conversion to permanent interest-only terms were found to be in financial stress".

Not sure what the "one instance" referred to is, which makes this journalistic statement of very limited use, but thought some of you might find it fun to argue about.

wotsthat

It's quite a messy article which is what usually happens when a story is written first and the facts retrofitted.

It doesn't take into account the sums of money which appear to be debt but are, in reality, sat on the sidelines earning a rate of return in excess of the mortgage rate. If anyone can achieve this then it makes sense to do whatever is possible to keep this going either by going IO or extending the term.

Offsetting will mitigate any future rate rises. Additionally, despite the IO offsetting, total mortgage debt is still on a downward trend which will mitigate any rate rises even more.

julieq

shortchanged wrote: »

Interesting to see some figures coming out at last. Where's julieq by the way?

I made a policy decision a few weeks ago not to comment on these discussions, essentially because it's a matter of religious faith as to whether there is a large number of people on the edge of financial oblivion being supported by a government conspiracy. You just end up arguing on the doorstep with glassy eyed Jehovah's witnesses so to speak. Neither side finds it very worthwhile.

But there's nothing in the numbers (which incidentally appear to be from a rehash of an article about 12 months old anyway and relating to shifts since 2007, i.e. not recent developments) that suggests that at all. There is a marginal increase in the number of interest only mortgages during one of the worst economic crises in history, as you'd expect. There are some extrapolations of what appear to be other measures to paint a particular picture. Oh yes, and this is from the Daily Telegraph which has a doom and gloom agenda anyway. It claims "FSA sources" for the 2/3rds estimate but then goes on to explain there's no measure for forbearance.

And in any case there's nothing wrong with interest only loans. Worst case you don't pay off the loan, that's no worse than 25 years of rental (and in fact usually the outcome is far better because payments decrease relative to rental and you get capital growth). Whether you're astute or not, you'll come out better like for like. There is something deep in the bear psyche that seems to want to believe that anyone borrowing is committing a sin against nature and needs to be punished hard for the slightest transgression, whereas renting is virtuous. It's completely mad, but what do you expect from Jehovah's witnesses?

So it's really old news that gives no new numbers at all, sorry shortchanged. The assertions and conclusions are suspect but even if correct are not significant in absolute terms.

The only real indicative measure worth anything at all is the arrears rate and bad debt provisions. Both of which are low in terms of absolute lending.

So that leaves us where we were really. You're on the doorstep glassy eyed and wanting to get in, and me in my house wanting to go out to the garden.

Graham_Devon

julieq wrote: »

I made a policy decision a few weeks ago

Well done for sticking by your guns!

Nice of you to tlel us once again what an article and the figures within actually mean.