800,000 "zombie households" only survive due to low rates

michaels

So I'm thinking - are we really living in a country of two halves - rebalancing away from the state is leading to falling employment, income and house prices more pronounced the further from London the bigger the effect whilst small increases in private sector employment are seeing growth in the SE and London. Plus each of these generate their own feedback loop, less money = less spending, lower property prices, more negative equity etc etc whilst the reverse in the SE, higher incomes, more spending, higher property prices, less NE and so on.

Generally govt transfers move money from the richer areas to the poorer - but these are exactly the transfers that are being reduced.

And may be the Boris result isn't just a personality thing but also to some extent a reflection of the underlying economic strengths?

Pobby

Love the bull mode. In fact surprised that Grahams figures are so low. Anyone noticed how unemployment is? People having problems with the super low 0.5%?

Ah but of course this only means one thing . A chance for the reckless lenders to recapitalise at a great rate of knots.

chucky

Pobby wrote: »

Love the bull mode. In fact surprised that Grahams figures are so low. Anyone noticed how unemployment is? People having problems with the super low 0.5%?

Ah but of course this only means one thing . A chance for the reckless lenders to recapitalise at a great rate of knots.

No Pobby, I'm starting to think that this bear type of person really struggles with detail and just reads headlines.

It's 8% of Interest Only mortgages not 8% of all people with mortgages. I know the latter sounds better but have a little think about it.

and btw, this 0.5% that you talk about. Do people with these problems borrow money from the Bank of England for their mortgage?

Graham_Devon

chucky wrote: »

No Pobby, I'm starting to think that this bear type of person really struggles with detail and just reads headlines.

It's 8% of Interest Only mortgages not 8% of all people with mortgages. I know the latter sounds better but have a little think about it.

and btw, this 0.5% that you talk about. Do people with these problems borrow money from the Bank of England for their mortgage?

No it's not.

Either you are confused or deliberately and purposely trying to twist the discussion for some reason that only you know.

So to explain....once....and once only, giving the benefit of the doubt that you are genuinely confused.

There are, according to the FSA, 800,000 people in forebearance.

The FSA also stated previously, that there are 300,000 interest only mortgages in forebearance.

Hamish, and yourself, questioned the 800,000 figure, so I found two ways of showing it could be correct. If there are 300,000 people on interest only mortgages in forebearance, it's not too far off the mark to suggest in total (interest only and repayment etc across all mortgages) 800,000 are in forebearance.

I genuinely hope this clears it up if you were genuinely confused. Little less haste with the abuse and a little more reading wouldn't have led to this.

ess0two

Pobby wrote: »

Love the bull mode. In fact surprised that Grahams figures are so low. Anyone noticed how unemployment is? People having problems with the super low 0.5%?

Ah but of course this only means one thing . A chance for the reckless lenders to recapitalise at a great rate of knots.

0.5% now how many with mortgages are benefitting with that rate.

wotsthat

Graham_Devon wrote: »

The 800,000 appears in this article to suggest people in arears right NOW. Not just those having missed a payment at any point...

Rather than worry about a journalists interpretation of what the FSA did or didn't say why not look at the BOE financial stability report from December 2011 from where the numbers come from.

http://www.bankofengland.co.uk/publications/Documents/fsr/2011/fsrfull1112.pdf Page 30

The FSA forbearance review carried out for the FPC covered three quarters of UK mortgages. It suggests that 5%–8% of mortgages are subject to forbearance, depending on the definition applied. FSA estimates indicate that around 5% of these households would have been in arrears of six or more months if they had not received forbearance. That suggests that, in the absence of forbearance, the mortgage arrears rate might have been 0.5 percentage points higher at 1.7%, even at near-zero official interest rates

Some scary stuff but immediately we see that 8%, rather than 5% - 8%, is journalists preferred number (better headlines?). Arrears would have been 1.7% without forbearance or about half the arrears of the early nineties.

Graham_Devon

Half the arrears of the early nineties, with interest rates what, 2000% higher than they are now?

Can't compare simply on arears while ignoring the biggest factor there is.

grizzly1911

wotsthat wrote: »

. Arrears would have been 1.7% without forbearance or about half the arrears of the early nineties.

This is an average figure and the spread makes much worse reading moving South to North where 6 -8% is closer to reality..

Thrugelmir

ess0two wrote: »

0.5% now how many with mortgages are benefitting with that rate.

Around 6 million mortgages now sit on SVR.

So the majority of borrowers are very much at the mercy of lenders rather than the BOE base.

chucky

Graham_Devon wrote: »

No it's not.

Either you are confused or deliberately and purposely trying to twist the discussion for some reason that only you know.

It amuses me your need to lie to get your point across. You've fallen hook, line and sinker for the journalists interpretation and your blinkers are not allowing you to see outside that.

So let's try again
I'll take it slow for you as I know you struggle...
There are approx 11 million mortgages in the UK.
35.2% are interest only.
Up to 8% of these are in forbearance.
That is 320,000 mortgages which is where we are.

Here's the detail from one of the articles.

35.2% of 11 million mortgages are Interest-Only Deals
Up to 8 per cent of these are ‘in forbearance’, says FSA

Up to 320,000 homeowners with Interest-Only mortgages are at risk of losing their property Because they are struggling to pay.

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

Let me educate you further. If a mortgage goes into forbearance, the mortgage loan will be switched to an interest only mortgage. The reason is that repayment mortgages are higher payments due to capital repayments. I have to explain that to you because you didn't understand that the loan amount is the same for interest only and repayment.