Mortgage crisis = A bug's life

[flobadob]

A lot of people are currently finding it difficult to pay their mortgage/loan on their house, a house that was sold at an inflated price at a time when people were terrified that house prices were destined to rise. This fear was perpetuated by governments which scaremongered people into trying to buy homes for their families.

Now, thousands of people are stuck in negative equity, paying off a £200,000 loan on something worth £100,000, for example.

Why should everyday working(if they're lucky) people be able to get into such a situation? Should it not be a right for every citizen to own and provide for a family home? Is it fair that a government, in league with the banking sector, can watch over this suffering?

I'm reminded of the Disney animated film, A Bug's Life. And I ask the question, are we the ants, and they the grasshopper?

[ummmm]

Hindsight is a wonderful thing.

[New Judge]

Unless they have remortgaged to finance something else I don’t think there are many people who have the level of negative equity you suggest. I would suggest about 15% at maximum (i.e. their £200k house if now worth “only” £170k).

Mortgage repayments now are for most people the lowest they have ever been, or ever likely to be. So unless a person has lost their job their ability to meet their payments will be far greater than in, say, 2008 when property prices and interest rates were relatively high. The problem with a number of families is that their mortgage repayments tend to come lower down their list of priorities than, say, their two weeks in Mallorca or their new Toyota Land Cruiser.

Nobody is forced into buying a house and similarly nobody has a right to do so. You make your own choices in these matters but it should come as no surprise to you that property prices and interest rates can fluctuate, especially over the long term that a mortgage usually involves.

[flobadob]

Judge, what are you on about? Every family should have a home. You shouldn't have to be forced into it, it should be a right.

[ubasses]

Everyone should have somewhere to live, but it is their choice to either buy or rent. Some people do not want to buy.

[sandyRoe]

Having a home and having a mortgage are two very different things.

[Purple_Popple]

Its a common case of people with mortgages not doing their own 'homework' and keeping an eye on the interest rates etc and budgeting to meet needs or re-mortgaging for a better deal when the time arises. Too many people are very lazy and no wonder they get into difficulty but as always they leave it too late. Like the grasshopper that sang all summer.

[LoftyLottie]

New Judge is absolutely right. I think it's a great shame that people that lose their jobs are stuck with paying a mortgage on a property that has lost about 15% of its value, but this has happened before and will happen again. House prices will eventually rise again and, for those who are still in jobs, why is it more difficult to the pay the mortgage that they took on now. Interests rates have gone done to the lowest ever.

It is only in recent history anyway that less well off people have been able to become house owners. I can remember in the years after the war when home ownership was rare unless you were well healed - hence the massive rise in council house building after the war.

People have the right to buy or rent their homes, whatever suits them and there is always a risk whatever option you choose.

I can't think of any houses that were worth £200,000 now being worth £100,000.

Unfortunately also we don't live in Utopia. Life is a struggle for the majority - no good wingeing!!

[New Judge]

Yes flobadob, every family should have a home. But it isn’t a right it is a responsibility. Adults are responsible for ensuring they (and their children if they have any) have somewhere to live. The problem in the UK is that many people have been led to believe that the State will provide for them in every respect from cradle to grave. Hence the calls for ever more so-called “social housing”. I even heard on the radio yesterday somebody suggest that property should only be rented by elected individuals or bodies whose activities in the home rental market are even more heavily controlled than property rental is at present. What utter tosh.

As has been pointed out, having a home and buying one on mortgage (which was the point of your question) are two entirely different things. Nobody is forced to take on a mortgage but many people enter into the mortgage and property market with scarcely a clue about either. When they buy their new Land Cruiser they read countless reviews, trudge around dealers for the best price, get the AA to do a mechanical survey, get numerous quotes for the best finance deal. Yet when they enter into what for almost all of them is far and away the biggest financial transaction they will ever make, one which will take them half their working lives to conclude, they dabble in a volatile market they know little about with little research or contingency plans.

It’s small wonder that some of them have their fingers burnt.

[Le Chat]

As a lettings agent, renting is a poor alternative to buying your own home. It is common in Italy for example, to rent for life but here it is not the case. The rental market is riddled with substandard properties rented out at ridiculous prices. Landlords are, as a rule, greedy and not willing to maintain properties adequately. On the other hand, because tenants do not think of thier rental homes as 'forever' homes. they are unwilling to spend any of their own money on maintenance, in case the Landlord should sell the property....which often happens. Many of our rental properties are for rent or to buy. This combination of Landlords not wanting to spend money on a house that they don't live in, combined with a tenant who does not want to spend money on a house that is not 'theirs' has lead to poorly maintained, second rate accommodation. I am lucky to own my own home ( bought in 2000 for £133500 - now worth £310000) but I cannot see either of my sons, who are teens being able to buy, unless they either have amazingly well paid jobs, or we die and they inherit.

[wildwood]

On the positive side....... Mortgage repayments become easier every year as wages rise but the repayments stay pretty much the same, so a smaller % of the income is spent on repaying the mortgage.

If renting, the rent goes up according to inflation - roughly. So buying is usually the best option in the long run.

[factor-fiction]

Sorry flobadob, I don't agree with most of your points and for the same reasons others have given.
But if you are right about so many people currently struggling to pay mortgage payments then I'm afraid it will get a lot worse as interest rates are at a historically low level and will almost certainly rise at some stage. They could easily double in the next 3 years.
Maybe in the long run it's not a bad thing that people have had a shock with falling house prices- maybe people will not make the same mistakes about over stretching themselves in the future and house prices might stay at a sensible level.

[boxtops]

Negative equity's not new, loads of us were affected by this in the 1980s. It's not a right for everyone to OWN a home - in other countries (e.g. France) the vast majority rent.

[Le Chat]

I do not agree that wages have gone up per se. I am on the same wage as I was 2 yrs ago and so are most of my friends.

[boxtops]

Yep, so am I. Our public sector wages are frozen.

[hc4361]

I struggled to pay my mortgage in the 80s when interest rates to 16%. My mortgage repayments got very high and I was in negative equity.
The joy now is that I paid off my mortgage 10 years ago so pay neither rent nor mortgage and still have a good few years of working life ahead of me.