According to a report of the Bank of England’s figures from This Is Money, one in ten homeowners have borrowed a mortgage of GBP150,000 or more. It is not uncommon to find loans double this amount. Consequently, there has been a worrying rise in the number of homeowners struggling to keep up with repayments, with around 900,000 homeowners reported to be having difficulties. This is the fourth consecutive year in which this rate has increased.
In addition, there has also been a growing number of people who are losing their homes or risk being evicted, with the number of repossessions having increased by 76% between January and June to 8,140.
The Bank claimed that those experiencing mortgage problems tend to earn around GBP30,000 a year and have a total debt of around GBP93,000 including credit cards and personal loans.
Part of the responsibility has been located to banks and building societies for being too liberal with their loans. Several lenders including Northern Rock and Halifax’s subsidiary Birmingham Midshires have been discovered to offer a loan worth 125% of the total value of the home.
Nick Gardner, director of Chase De Vere Mortgage Management said: If people borrow the maximum they can get away with, it is quite possible they will be overstretching themselves. It may then only take one or two rate rises to put an impossible squeeze on their finances.
