Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

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

Housing-Market

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 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

R.E.B
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