The difference between the US and UK

Graham_Devon

When it comes to mortgage debt liability.

The US seems to be successfuly reducing mortgage liability, and continues to do so.

However, the UK never did actually reduce liability and it continues to increase.

The graph shows that for 20 years, mortgage liability rose at the same rate in the US as it did in the UK.

Who is in the better position now? Quite a telling graph IMO. With the schemes we have in place the gap is only going to increase. Are we now on our own?

wotsthat

Graham_Devon wrote: »

However, the UK never did actually reduce liability and it continues to increase.

The graph shows that for 20 years, mortgage liability rose at the same rate in the US as it did in the UK.

A lot of the liabilities were simply written off in the US. I'm not sure that there's any evidence to show that US consumers have been more active in paying down mortgages when compared to the average Brit.

shortchanged_2

Well if the worst comes to the worst in the UK we can always kick people out of their homes and knock them down. That should help maintain house prices.

ILW

For a "market" to operate, people need to be kicked out of their homes. Think we are too sentimental here.

wotsthat

Looking at recent reports of eye-watering HPI rates in the US those graphs should be heading back to convergence soon.

Mallotum_X

Average debt per homeowner may give more insight.

Radiantsoul

Quite a lot of lending in the USA is non-recourse.
So the debts have been wiped off, and everyone walks away happy.

The situation is different in the UK.. I am not really sure what the right level of mortgage debt is. As a society we presumably want there to be some.

Thrugelmir

Graham_Devon wrote: »

Who is in the better position now? Quite a telling graph IMO. With the schemes we have in place the gap is only going to increase. Are we now on our own?

Clearly shows that we pay far more for property in the UK than the US , for a whole variety of reasons.

Not sure that comparisons have any meaning anyway. The issue with UK mortgage debt levels has been well documented since 2007. The level of debt will fall. More a question of how long it will take.

Generali

It'd be interesting to see the graph in real (inflation adjusted) terms. IIRC, UK inflation had been high than in the US over the period.

michaels

Don't forget the US will have increased its housing stock by a considerable proportion over the period whereas the UK has not so the UK debt per property will have risen even faster relatively.

However what Graham doesn't understand is it is a matter of supply and demand - if I have to pay 80% of my take home to put a roof over my family and forgo almost everything else in life then I will. In the US the price of a house far exceeding the build cost results in more houses being built, a lot more, until there is a glut (and a price crash). In the UK it makes no difference to the supply.

Generali

michaels wrote: »

Don't forget the US will have increased its housing stock by a considerable proportion over the period whereas the UK has not so the UK debt per property will have risen even faster relatively.

However what Graham doesn't understand is it is a matter of supply and demand - if I have to pay 80% of my take home to put a roof over my family and forgo almost everything else in life then I will. In the US the price of a house far exceeding the build cost results in more houses being built, a lot more, until there is a glut (and a price crash). In the UK it makes no difference to the supply.

I think that's the point of the changes to the planning laws the Tories are making. It's an attempt to make supply more responsive to price signals.