Fri 31st Aug, 2007
Mortgage Crisis Looming?
The international community is watching as the UK balances on the brink of a mortgage crisis in the coming years. Mortgage payment arrears are increasing sharply as 18 million homeowners struggle under the burden of the fifth interest rate increase in less than a year.
This is compounded by the high-risk mortgage products the banks have been offering, and the fact that banks are offering home loans at five and six times people’s annual income.
The Council of Mortgage Lenders (CML) Michael Coogan said: “The record number of borrowers who are now paying stamp duty makes a difficult situation even worse, despite the financial windfall to the Treasury. This needs to be addressed urgently.”
First-time buyer income reached its highest level ever in May at 3.37 times the first-time buyer’s income. This is up from 3.33 times in April. Mortgage interest payments have hit 19.1 percent, their highest level since 1992.
CML expects 18,000 repossessions in 2007, one thousand more than 2006. Almost 77,000 home loan repayments are missed every month in the UK, according to MoneyExpert.com website,
The world is watching the housing boom with interest. While it has make the UK one of the world’s investment hotspots, and is turning it into a global community, it is creating a problem for residents.
The average property price in the UK has trebled to breach the 200,000 pound level, since Labour Party came into power in 1997.