.comment-link {margin-left:.6em;}

Saturday, October 20, 2007

A timebomb waiting to explode

This morning's Western Mail reports that homeowners in Wales are paying nearly twice as much in monthly mortgage repayments as they did five years ago. People's average monthly mortgage cost has rocketed from £201 to £465 since 2002. This figure represents 18.8% of Wales’ average joint take-home income.

In many ways this should not be a surprise. There has been a huge and sustained increase in house prices over the last few years that has led to people borrowing more and more to get onto the housing ladder. Lenders have responded to this crisis by relaxing their rules as to the proportion of a person's income they will advance for a house purchase.

None of this is sustainable of course. The level of personal debt in the UK is already at record levels. Back in August the financial consultants, Grant Thornton, suggested that as a whole we owe £1,335 billion, which is £5 billion more than the economy is worth. Credit card debt alone is £126 billion.

My concern is that the house price market is starting to level out and may soon start falling as it has done in Ireland. If that happens then the level of negative equity could easily out-pace that which was around in the last such crisis under the Tories.

In the meantime we still have hundreds of young families who cannot afford to get on the property ladder at all and who are being driven away from their own communities in search of somewhere to live. It is time the Welsh Government started to put in place its proposals to deal with that issue.
My concern is that the house price market is starting to level out and may soon start falling

RICS reports that the fall has started. Prices may still be rising in Scotland, though.
This seems to be part of the culture we have in our society to live beyond our means. We have been encouraged to get into debt by successive governements, personal debt is well above the one Trillion mark, if we had a national debt of this amount, governments would topple. So much for the end of the boom and bust economic trend Gordon Brown has promised us.
Any spare cash for me mortgage gov?
Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?