Top Ten Scary Mortgage Facts
15 November 2007
The combination of high interest rates, the US sub-prime crisis and Northern Rock have all had an impact on home owners.
At SaveBorrowSpend we aren't going to shy away from bringing you the bad news so here are our top ten scary mortgage facts!
1. It’s tougher to get a mortgage. Mortgage approvals fell 12% in September, year on year, with lending now at its lowest level since 2000, according to the British Banker’s Association (BBA).
2. Is your property price falling? Hometrack’s latest figures show house prices dropped 0.1% during October, the first time prices in England and Wales have fallen for 2 years. If you live in London your house price could have dipped further by as much as 0.5%.
3. The mortgage repayment burden. November’s rate freeze at 5.75 is a blow for homeowners, there were high hopes the rate would be cut to avert the risk of an economic slowdown.
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4. Buying a property? Be prepared for mortgage repayments to take up a large slice of your monthly outgoings. The BBA says the average mortgage for a property purchase is a whopping £152,300, up 8% in a year.
5. 100% mortgages. One in twenty first-time buyers opt for this type of mortgage and if house prices drop, the experts are warning many face negative equity.
6. Fixed rate mortgages. A staggering 60,000 households in the UK are set to see their fixed rate mortgage come to an end in the next year. Online mortgage company, mform.co.uk is warning that many people simply won’t be able to find comparable deals.
7. First-time buyer? It’s estimated that those trying to get a foot on the property ladder need to be earning more than £40,000 to take out an average mortgage of three times their salary.
8. The buy-to-let market is heading for a slump. Gordon Brown’s housing market advisor, Kate Barker says higher interest rates, combined with collapsing rental markets mean small-time property speculators are ‘vulnerable’.
9. British homes are over-priced by up to 40% according to the International Monetary Fund (IMF). It warns the UK housing market is in danger of a slump similar to that seen in the US.
10. Repossession fears. The Royal Institute of Chartered Surveyors (RICs) is predicting a 50% increase in the number of repossessions – to 45,000 per annum. However, it’s not all bad news, this is a long way short of the 1991 level of 75,000.
SaveBorrowSpend Philippa Adam
