Mortgage Debt Arrears improving markedly

HAMISH_MCTAVISH

During the second quarter of 2012, the proportion of homeowners who paid off some of their mortgage arrears increased by 11pc to a total of 60pc compared to 36pc of homeowners who had defaulted and were paying debt back in 2009.

Significantly, those who have fallen behind with their mortgage in the past are also now paying back larger chunks of their debt. Out of the 2,652 who received a visit or telephone call from a debt counsellor during the second three months of 2012, almost 43pc paid an amount back equivalent to or more than one month’s mortgage – representing a significant rise on the 37pc who did the same during 2011. Only 27pc paid this amount in 2009.

http://blogs.telegraph.co.uk/finance/ianmcowie/100018553/house-prices-may-be-falling-but-householders-are-digging-their-way-out-of-debt/

Excellent news.

DervProf

This is probably the best possible scenario after several years of easy credit and a boom in house prices. We have had several years of very low or negative HPI, low repo's and mortgage arrears are under control.

Lessons need to be learned from this. The main point as I see it, is that if we start to have a high rate of HPI in the future, the banks, government, BoE should take action to keep it in check, rather than thinking that it is a good thing. High HPI will only lead to problems, somewhere down the line.

I know that there is the argument that we had a house price boom, and there have been relatively few repo's etc. Some will argue that high UK HPI had nothing to do with the credit crunch. There is no doubt in my mind that although the UK didn't benefit directly cause the credit crunch, our HPI was "helped" by what was going on in the lead up to it. We "benefited" by the actions of the guilty parties, if you like.

HAMISH_MCTAVISH

Well it certainly seems lessons were learned from the 90's crash, and banks are exercising forbearance because it's in their financial best interests to do so.

When you give people time to get back on their feet after they've been hit by the recession, the vast majority will do so and start paying off their mortgages again.

Better for homeowners, better for banks, better for society.

(Not so good for crashaholics, but that's a price worth paying.)

Fella

Unless IRs are kept at 0.5% for the next 25 years this is just one more variation of kicking the can down the road.

Far too many people bought overpriced houses they couldn't afford & only current monetary policy is keeping them from going under. Since we have effectively no wage inflation (but plenty of real inflation) even that won't be enough for much longer.

A depressing mess but people, banks & countries who can't afford to pay their debts should be allowed to go bust. Mass socialization of debt to bail each group out is basically a disaster that won't help anyone in the end.

System

People paying off debt is one more variation of kicking the can down the road.

ess0two

I'm sure someone on here can manage to pick holes in the article.

Graham_Devon

Brilliant. Excellent news. I'm overjoyed. "Some" arrears are being paid, which still leaves arrears for the people in them, but bloody brilliant news. How can anyone even suggest there was a problem at all?

It's now all fixed. Joyous.

System

Graham those tantrumy, bitter parody posts don't do you any favours.

Arrears are down, that's it, no need to spit the dummy. It IS good news I'm afraid.

shortchanged_2

I'll try the usual bull response here.


11% of a small amount is totally insignificant.

Plus the sample size was so small the report has no credit. No credit it all.
This piece of research is totally pants.

Fella

Joeskeppi wrote: »

People paying off debt is one more variation of kicking the can down the road.

No you didn't understand my post. Keeping IRs at 0.5% indefinitely is kicking the can down the road. Allowing them to rise (as eventually they must) will mean repossessions & house prices falling. Painful in the short term but ultimately much better in the long term. Living in a country where so many people can't afford a house - & those who DO finally manage to buy one will spend almost their entire lives paying for it - is a disaster.

Here's a tip: Anyone who tries to tell you that high house prices are a good thing is a liar or a fool. Or both.

Graham_Devon

Joeskeppi wrote: »

Graham those tantrumy, bitter parody posts don't do you any favours.

Arrears are down, that's it, no need to spit the dummy. It IS good news I'm afraid.

Well you were all basically suggesting no one could even look into it, without being class as doom mongers. Look at how Fella got instantly written off. Look at the "Im sure someone can pick holes".

So instead, I jazzed it up a little....and then looked into it

Didn't work

I wondered if it would be best to say nothing at all, but that would only lead to the accusation that people run away. Hmmm, it's a tough one. Say something and get lambasted? Say nothing and get lambasted?