Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
S&P 500 Stuck at 2,900, Still No Clear Direction - 17th June 19
Is Boris set to be the next Conservation leader? - 17th June 19
Clock’s Ticking on Your Chance to Profit from the Yield Curve Inversion - 17th June 19
Stock Market Rally Faltering? - 17th June 19
Johnson Vs Gove Tory Leadership Contest Grudge Match Betfair Betting - 17th June 19
Nasdaq Stock Index Prediction System Is Telling Us A Very Different Story - 17th June 19
King Dollar Rides Higher Creating Pressures On Foreign Economies - 17th June 19
Land Rover Discovery Sport Tailgate Not Working Problems Fix (70) - 17th June 19
Stock Market Outlook: is the S&P today just like 2007 or 2016? - 17th June 19
US China War - Thucydides Trap and gold - 16th June 19
Gold Stocks Bull Upleg Mounting - 16th June 19
Gold Price Seasonal Trend Analysis - Video - 16th June 19
Fethiye Market Fruit, Veg, Spices and Turkish Delight Tourist Shopping - 16th June 19
US Dollar Gold Trend Analysis - 15th June 19
Gold Stocks “Launch” is in Line With Fundamentals - 15th June 19
The Rise of Silver and Major Economic Decline - 15th June 19
Fire Insurance Claims: What Are the Things a Fire Claim Adjuster Does? - 15th June 19
How To Find A Trustworthy Casino? - 15th June 19
Boris Johnson Vs Michael Gove Tory Leadership Grudge Match - Video - 14th June 19
Gold and Silver, Precious Metals: T-Minus 3 Seconds To Liftoff! - 14th June 19
Silver Investing Trend Analysis - Video - 14th June 19
The American Dream Is Alive and Well - in China - 14th June 19
Keeping the Online Gaming Industry in Line - 14th June 19
How Acquisitions Affect Global Stocks - 14th June 19
Please Don’t Buy the Dip in Nvidia or Other Chip Stocks - 14th June 19
A Big Thing in Investor Education is Explainer Videos - 14th June 19
IRAN - The Next American War - 13th June 19
Boris Johnson Vs Michael Gove Tory Leadership Grudge Match Contest - 13th June 19
Top Best VPN Services You Can Choose For Your iPhone - 13th June 19
Tory Leadership Contest Betting Markets Forecast - Betfair - 13th June 19
US Stock Market Setting Up A Pennant Formation - 13th June 19
Which Stocks Will Lead The Cannabis Rebound? - 13th June 19
The Privatization of US Indo-Pacific Vision - Project 2049, Armitage, Budget Ploys and Taiwan Nexus - 12th June 19
Gold Price Breaks to the Upside - 12th June 19
Top Publicly Traded Casino Company Stocks for 2019 - 12th June 19
Silver Investing Trend Analysis - 12th June 19
Why Blue-Chip Dividend Stocks Aren’t as Safe as You Think - 12th June 19
Technical Analysis Shows Aug/Sept Stock Market Top Pattern Should Form - 12th June 19
FTSE 100: A Top European Index - 12th June 19
Gold Surprise! - 11th June 19
How Forex Indicators are Getting Even More Attention in the Market? - 11th June 19
Stock Market Storm Clouds on the Horizon - 11th June 19
Is Your Financial Security Based On A Double Aberration? - 11th June 19
What If Stocks Are Wrong About Interest Rate Cuts? - 11th June 19
US House Prices Yield Curve, Debt, QE4EVER! - 11th June 19
Natural Gas Moves Into Basing Zone - 11th June 19
U.S. Dollar Stall is Good for Commodities - 11th June 19
Fed Running Out of Time and Conventional Weapons - 11th June 19
Trade Wars Propelling Stock Markets to New Highs - 11th June 19
Best Travel Bags for Summer Holidays 2019, Back Sling packs, water proof, money belt, tactical - 11th June 19
Betting on Next British Prime Minister Tory Leadership Betfair Markets Forecast - 10th June 19
How Can Stock Market Go Up When We’re Headed Towards a Recession? - 10th June 19
If You Invest in Dividend Stocks, Do This to Double Your Returns - 10th June 19
Reasons for the Success of the Dating Market - 10th June 19
Gold Price Trend Analysis - Video - 10th June 19
US Stock Markets Rally Hard – Could Another Big Upside Leg Begin? - 10th June 19
Stock Market Huge Cosmic Cluster Ahead: Buckle Up! - 10th June 19
Stock Market Higher To Go? - 10th June 19
The Gold Price Golden Neckline… - 10th June 19
Gold Price Seasonal Trend Analysis - 9th June 19
The Fed Stops Pretending - 9th June 19
Fed Rate Cuts Soon; Bitcoin Enthusiasts Join Wall Street in Bashing Gold - 9th June 19
1990s vs. 2010s - Which Expansion Will be Better for Gold? - 9th June 19
Gold Price Trend Analysis, MACD, Trend Channels, Support / Resistance - 8th June 19
Gold Surges Near Breakout - 8th June 19
Could Gold Rally Above $3750 Before December 2019? - 8th June 19
5 Big Lies About Precious Metals Investing Exposed - 8th June 19

Market Oracle FREE Newsletter

Gold Price Trend Forecast Summer 2019

UK Facing Housing Costs Time Bomb - Millions at the Mercy of Bank Interest Rates

Housing-Market / UK Housing Mar 03, 2014 - 07:05 PM GMT

By: Global_Research


Dennis Moore writes: Millions of people across Britain have serious concerns as to whether they will be able to afford to keep their homes, according to the housing charity Shelter.

A survey of 4,000 people by the charity, organised via YouGov, revealed the disturbing trend, as many said they feared they would not be able to meet housing bills. One in five of those surveyed said they were so anxious they did not open their post if they thought it could be a late payment reminder.

Families are the worst affected, with currently over 70 percent of mortgage or rental payers with children struggling compared to 63 percent of the general population. The small gap, however, testifies to the economic insecurity affecting the broad mass of the population.

Campbell Robb, chief executive of Shelter, explained, “Despite recent discussion of an economic recovery, we know that a combination of high housing costs, wage freezes, and rising food and energy bills has created a nightmare scenario for many families that’s pushing them to breaking point.”

He went on, “It’s a worrying sign of the times that so many are starting the New Year worried about how they’ll pay their rent or mortgage in 2014. Unless they get help, some of the families struggling now could face the very real prospect of losing their home this year.”

According to earlier findings from Shelter, it is estimated that 1 in every 105 households in Britain are at risk of repossession. This figure is much higher in “repossession hotspots” that are spread across the UK. These include Salford in Greater Manchester, where 1 in 60 homes are at risk, and Newham in London, where 1 in 35 homes are at risk.

Declining wages as a result of pay cuts and freezes that have been implemented almost across the board, combined with rising unemployment and insecure employment, mean that many have to go heavily into debt to pay their rent or mortgage payments.

A recent survey of more than 3,500 people found that increasing numbers of people are taking on risky loans and one in five reported having to borrow money to meet housing costs. Of those surveyed, it was found that 19 percent had used a loan, unauthorised overdraft, or credit cards, or had borrowed money from someone they knew to pay their rent/mortgage in the last 12 months.

Of these, 2 percent had to resort to extortionate Pay Day loans to pay their housing bills. These are short-term loans taken out by those with no other access to credit. Most are in work, but have run out of money before payday—hence the name.

With annual percentage rates of between 1,500 to 4,000 percent—sometimes even as high as 5,000 percent—these loans push people even further into debt. The total amount payable on a £300 loan (taken out for 30 days) at 1,737 percent Annual Percentage Rate, for example, works out at £375. If the loan is not repaid on the due date, it is often rolled over for another month, subject to another 30 days’ interest plus the interest already accrued.

Pay Day loan companies have grown exponentially over the last period, as more and more people struggle to pay for the basic necessaries of life—unable to meet their financial outgoings each month and often living a hand-to-mouth existence between pay packets.

Shelter has reported that the calls to its service for help from people struggling to pay rent/mortgages was up by a third from last year—from 6,797 in 2012 to 8,995 in 2013. The charity estimates that this figure disguises many who have not asked for help, attempting to hide their financial problems from their families and friends.

The fact that many people are still struggling to repay mortgage payments, even though interest payments are low, disguises a potential financial time bomb that is looming for millions of people across Britain.

The Resolution Foundation think tank carried out a study using the latest five-year growth projections from the Office of Budget Responsibility to model how the number of households that are described as being in “debt peril” could rise, dependent on interest rates and household incomes. At present, the fact that interest rates are low prevents many people from losing their homes.

The number of families currently spending more than half their disposable income on mortgage repayments could treble by 2018 if interest rates were to rise.

Even the most optimistic scenario, whereby interest rates rise slowly to 3 percent by 2018 and economic growth is strong, puts 1.2 million home owners still spending in excess of 50 percent of their take-home pay on mortgage repayments. This figure is accepted as an indicator of over-indebtedness.

If the Bank of England were to raise interest rates more quickly, to 5 percent by 2018, and growth continues to be slow, up to 2 million homes would face financial difficulties—half with families with children. It is worth noting that the markets believe the base rate (interest) will rise to 5 percent by 2018.

This points to future higher levels of precarious household debt than those experienced in 2007, prior to the financial crisis. Then, 870,000 households were spending more than half their net income on debt repayments. This fell to 600,000 by 2011, in line with falling interest rates.

Currently, one in six households are mortgaged to the hilt, servicing home loans that are at least four times the size of their annual salary, leaving many people vulnerable to interest rate hikes.

The fact that millions of people are at the mercy of bank interest rates in relation to a basic human need—housing—is socially criminal. The solution to this looming crisis requires a major redistribution of wealth, away from the rich to working people, and the nationalisation of the major construction firms under democratic workers’ control.

World Socialist Web Site

Global Research Articles by Dennis Moore

© Copyright Dennis Moore, Global Research, 2014

Disclaimer: The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of the Centre for Research on Globalization. The contents of this article are of sole responsibility of the author(s). The Centre for Research on Globalization will not be responsible or liable for any inaccurate or incorrect statements contained in this article.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


03 Mar 14, 23:23
Economic genius!!

Wow, the government owning and running everything, what a great idea. How come no one has ever thought of that before?

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules