Author: Ruth Jacob
A third of the UK population who are in or nearing retirement, owe a whopping £207 billion in outstanding mortgage debt; averaging at £37,316 per head reveals a new report from Key Retirement Solutions, the leading independent equity release specialist.
The findings released from analysis based on 4,507 people aged 55 plus who released equity in their home with Key Retirement Solutions in 2007, show that there has been an 20 per cent rise year on year in the average amount of mortgage debt owed by those in, or nearing retirement. Further analysis shows:
Thirty-two per cent of all over 55s have outstanding mortgage debt, while 35 per cent of those aged 60-69 years and 29 per cent of those 70 years and over still have mortgage repayments to make
Dean Mirfin, Business Development Director at Key Retirement Solutions said: “Whilst this analysis is based on those who have released equity from their home, if this is only part reflective of pensioners as a whole, then this is of huge concern. The rising cost of living is increasingly affecting all of us today, but it is the older generations that are feeling the pinch more than others.”
Key Retirement Solutions analysis shows that the average monthly repayment on outstanding mortgage debt for retirees is £218. Industry statistics show that nearly two-thirds (62 per cent) of pensioner couples have a total pension income of less than £10,000, and this falls to less than £6,000 for half of single pensioners. Assuming for those receiving £6,000, their average monthly mortgage payment is £218, once this has been paid this potentially leaves just £282 to cover council tax, all utilities, food clothing and other expenses each month.
According to the Consumer Credit Counselling Service (CCCS), for the first time, clients over 60 have the highest levels of debt and they are increasingly seeking help - now equal to the number of under 25s who go to the for help with their finances.
Chris Tapp, Director of charity Credit Action, commented on Key's findings. He said: "These findings show that the financial difficulties of those entering, or already in, retirement show no sign of easing in 2008, if anything the picture is worsening. At Credit Action, we are concerned that the stresses on household budgets that everyone is facing, whether it be rising food costs or higher utility bills, affect pensioners to a greater degree. This, coupled with the fact that people had to borrow more and for longer periods in mortgages as house prices have grown over the last few year, means that many are facing tough times and perhaps tough decisions, in order to keep their finances on track. It is vital that people who are worried take action, and the sooner the better."
Dean Mirfin, Business Development Director at Key Retirement Solutions concludes: “Our analysis shows we are seeing more and more people reaching retirement still with outstanding mortgage debt. An increasing number of people are choosing to re-mortgage as an alternative to downsizing, carrying out improvements on their home, or even helping their children get that first step on the property ladder in today's almost impossible market. As the cost of living continues to rise, more than ever people approaching retirement should be aware of the real threat debt poses to their finances in retirement and subsequently their lifestyle.”
Article Source: http://www.articlesbase.com/mortgage-articles/mortgage-debt-will-affect-pensioners-480097.html
Author: Phil
Building societies in the UK saw a fall of more than £1 billion in their mortgage lending during March 2008 according to published home loans data. They also observed a drop in advanced net loans from £1.8 billion to £580 million compared to the same moth of 2007.
This decline which equates to a 68 per cent slump, has led to building societies tightening their lending far more than their mortgage bank rivals. One in five prospective homeowners used to be accepted for loans from building societies, but this figure stood closer to one in ten.
Data released from the Bank of England showed that the home loans market had reduced by over 40 per cent, but that building societies had reduced their share of net lending, which included customers repaying their mortgages, at a faster rate than the overall market.
After analysis of the data, the results revealed the difficulties that faced lenders wanting to raise money, as a result of market changes.
Although gross lending, including all home loans had fallen in a year, building societies still held a healthy market share of 15 per cent, only a small drop down compared to 17 per cent a year ago.
However the net lending figures indicated that building societies were losing their customers at a quicker rate than they were able to entice new ones. There was also evidence that they were unable to retain borrowers who were reaching the end of their mortgage agreements, which was either as a result of uncompetitive rates meaning customers looked elsewhere, or because the societies were becoming more stringent about who they lent to.
A spokesperson for the Building Societies Association said, “This fall is a consequence of gross lending coming down and building societies pulling back on the amount they lend so that repayments have gone up.
The Abbey made a claim to have sold one in six of all the mortgages sold in the UK during the first quarter of 2008, however, this was tempered by reports that most of these customers were re-mortgaging and very few new applicants were able to meet the necessary credit criteria. It was also suggested that Abbey’s new 16 per cent share of the market compared to their traditional 9 per cent share, was as a result of Northern Rock’s downfall meaning they were no longer competing for business. Other lenders were facing problems too as a result of the credit crunch.
The Building Societies Association claimed that small lenders were being swamped by new applicants if they appeared at the top of the ‘best buy’ tables, with some of the big lenders aiming to stay at the bottom of these lists by suddenly raising rates or pulling out of the market.
Building Societies had however, been gaining new saving customers due to many financial firms being anxious to attract deposits to help support lending. Societies on average fund 70 per cent of their lending through deposits, with a new high of £1.2 billion of saving credit being reported for March 2008.
Article Source: http://www.articlesbase.com/mortgage-articles/uk-building-societies-suffering-from-a-fall-in-home-loan-lending-476045.html
