Lazy repost - Interest only, the ticking timebomb say Daily Mail

tomstickland

http://www.dailymail.co.uk/news/article-2127667/Interest-mortgage-timebomb-hundreds-thousands-struggle-pay-debts.html

I expected this to be posted here already. Maybe it is. I couldn't see it.

DpchMd

https://forums.moneysavingexpert.com/discussion/3886077

tomstickland

Yes, but not a link to that DM article.

vivatifosi

I heard both stories reported on the news. The big difference between the two that struck me was the comment that there an estimated 300,000 have missed one or more payment, with the commentor on the news stating that if you can't afford to pay even an interest only mortgage at the time of the lowest ever lending rates, then things probably aren't looking good for the future.

Imo that's quite different to the other interest only article, which is predominantly about the mortgages maturing without a vehicle to pay them off or the restriction to part-payment.

If the extrapolations are correct and there are 300,000 missing payments on interest only, then that's not good.

mr_fishbulb

There was an article in The Sunday Times Money Section about some family who were on interest only and reckon they are going to pay off the capital by investing in one Emerging Markets fund (one single fund).

Sampong

Very worrying.

One of the contributing problems to this is the fact that we live in a debt culture.

Teenagers will take out loans to buy and insure cars they can't afford.

Grown ups do the same with property......

Taking out an interest only mortage and gambling on interest rates remaining low is basically a case of heads being buried in the sand. The banks are the real crooks of course - for allowing it to happen.

roddydogs

Its not only IO Mortgages, its all Mtges where borrowers are used to a ridiculously low rate at the expense of savers., revenge will be sweet.

Sampong

I would love it if interest rates went up.

Can't see it happening anytime soon though. Any converse opinions?

Kennyboy66

roddydogs wrote: »

Its not only IO Mortgages, its all Mtges where borrowers are used to a ridiculously low rate at the expense of savers., revenge will be sweet.

I didn't realise that people still thought of debt and saving as a moral issue. People have been waiting for debtors to be "punished" for years.

How long will it be before you change your mind ?

What revenge will be exacted on those who have taken the opportunity to pay off most of their mortgage ?

RenovationMan

Kennyboy66 wrote: »

I didn't realise that people still thought of debt and saving as a moral issue. People have been waiting for debtors to be "punished" for years.

How long will it be before you change your mind ?

What revenge will be exacted on those who have taken the opportunity to pay off most of their mortgage ?

Probably the instant they take their deposit money (the reason they want high interest rates) and buy a house wth it. Once they have a mortgage they will sing to a different tune.

pinkteapot

mr_fishbulb wrote: »

There was an article in The Sunday Times Money Section about some family who were on interest only and reckon they are going to pay off the capital by investing in one Emerging Markets fund (one single fund).

Good to see a demonstration of how easy it is for clueless retail investors to bypass the suitability assessment that they are meant to pass before investing. I am assuming that the manager of this particular fund didn't evaluate them and conclude they were bright enough to invest in it.

I work for a company that manages EM equity funds. A typical fund has returned just over 100% (cumulative) over three years and -25% (cumulative) over five years. I do hope this family are watching the Fund and plan to cash out when they've made a decent amount (rather than ignoring it until the week before their IO mortgage falls due).