UK pays down mortgages

Graham_Devon

Some would have you believe this means people are overpaying becaue they can afford to.

However, it's not the case. It's because people can't remortgage, so continue to pay off existing debts.

The amount owed on mortgages fell by a net £9.8billion in the second quarter of this year official figures have shown today, but the trend is down to homeowners being unable to remortgage rather than a drive to pay off debt.

Britons reduced their mortgage debt for the seventeenth quarter in a row between January and April, bringing the cumulative net injection of equity into houses to £133.2billion since the second quarter of 2008.

But the Bank of England said there was 'little sign' that households are trying to pay down their debt more quickly than in the past, but instead that mortgage repayments have not been balanced with increased loans through remortgaging.

The property market continues to be sluggish and mortgage lending has fallen away. Figures recently released by the British Bankers' Association (BBA) showed that mortgage approvals for house purchases were 13 per cent lower than a year ago in August.

The BBA said that consumers are continuing to act ‘conservatively’ in the weak economic environment, by paying down their debts and building up their savings.

http://www.thisismoney.co.uk/money/mortgageshome/article-2212233/Brits-pay-9bn-mortgages-months--remortgage.html

Thrugelmir

Graham_Devon wrote: »

However, it's not the case. It's because people can't remortgage, so continue to pay off existing debts.

MEWing to support lifestyle died in 2007/2008 with the demise of the easy lending mortgage market.

Also the progressive switch to repayment mortgages has started to turn the tide of ever increasing debt. As lenders show no appetite to lend more in overall total.

All good news. Long way to go but every little bit helps.

CLAPTON

UK Debt Statistics
October 2012

UK Personal Debt

• Outstanding personal debt stood at £1.412 trillion at the end of August 2012.
• This is up from £1.407 trillion at the end of August 2011. Individuals owed nearly as much as the entire country produced during the whole of 2011.
• Outstanding secured (mortgage) lending stood at £1.256 trillion at the end of August 2012. This is up from £1.242 trillion at the end of August 2011.
• Outstanding unsecured (consumer credit) lending stood at £156 billion at the end of August 2012. This is down from £165 billion at the end of August 2011.

now I wonder how these two sets of statistics can be correlated and explained?

michaels

Don't understand the remortgaging bit - surely it is because the number of new purchase transactions is down?

Thrugelmir

CLAPTON wrote: »

now I wonder how these two sets of statistics can be correlated and explained?

Mortgage borrowers are no longer withdrawing equity when remortgaging.

Every month new borrowers take out a mortgage thereby increasing the amount of total debt owed.

So if you were to ignore new advances made from the figures. Existing borrowers made a net repayment of debt. Not on any large scale though.

As one report said .
"If the turmoil of the past five years has taught us one lesson, it's that our castles can no longer be treated as cash machines."

ManAtHome

Thrugelmir wrote: »

So if you were to ignore new advances made from the figures. Existing borrowers made a net repayment of debt. Not on any large scale though.

Latest numbers I saw were around £9.5bn a quarter for 2012, so around 3% of the total outstanding per year. Not sure how many years in (to a repayment mortgage) you'd hit 3% capital repayments, but doesn't sound to me like everyone is massively over-paying.

ruggedtoast

Every month I pay the banksters, who I had to borrow from to buy my house, hundreds of pounds in interest to sit on their fat backsides doing sweet eff-ay while I toil and flagellate myself in my public sector job, striving for the benefit of an ungrateful public.

For what possible reason are these complete gits allowed to benefit in this way? They paid me actually sod all in interest when I had my money in their shonky banks, but as soon as I borrow some from them they want a pound of flesh.

Loughton_Monkey

ruggedtoast wrote: »

....For what possible reason are these complete gits allowed to benefit in this way?....

• They have the money. You don't.
• Self-flaggellating public sector workers rarely have enough money to buy a house with cash.
• You chose to borrow from them. You agreed with the Interest Payments.
• Bankers deserve recompense for one of the most unpleasant tasks they have to perform - i.e. lending thousands of pounds to public sector workers who sit on their backsides doing sweet eff-ay while being thrown money from the over-burdened taxpayer.

Conrad

ruggedtoast wrote: »

Every month I pay the banksters, who I had to borrow from to buy my house, hundreds of pounds in interest to sit on their fat backsides doing sweet eff-ay while I toil

Real lack of business accumen displayed here.

Imagine your'e organisation has capital to invest.
There are way higher returns on capital than the paultry 3 or 4% made on retail mortgages, and thats before deduction of staff and other costs.

In fact I'm surprised they bother tbh?

wotsthat

Graham_Devon wrote: »

Some would have you believe this means people are overpaying becaue they can afford to.

However, it's not the case. It's because people can't remortgage, so continue to pay off existing debts.

I think you're referring your cherished BoE study from a couple of years ago?

It said that this was due to less house moves and a move towards repayment mortgages. House moves are associated with new lending and clearly IO a conversion to repayment will increase capital payments.

It didn't back up your assertion that people are too skint to overpay or that overpayment simply isn't happening.

Graham_Devon

wotsthat wrote: »

I think you're referring your cherished BoE study from a couple of years ago?

It said that this was due to less house moves and a move towards repayment mortgages. House moves are associated with new lending and clearly IO a conversion to repayment will increase capital payments.

It didn't back up your assertion that people are too skint to overpay or that overpayment simply isn't happening.

You ought to read the words in front of you....

It's in the article...
But the Bank of England said there was 'little sign' that households are trying to pay down their debt more quickly than in the past, but instead that mortgage repayments have not been balanced with increased loans through remortgaging.