Is the UK housing market at risk from rising interest rates? UK unemployment in 2012 was just under 8%, compared to 10% in 2012. Fixed rate mortgages are still very low compared to previous years.Įven though bank lending rates haven’t fallen as much as base rates, mortgage payments are relatively low, and more attractive than renting. Homeowners on tracker mortgages are facing very low mortgage payments. In 2013, we have had a period of very low interest rates since March 2009. Unsurprisingly, these high interest rates caused many homeowners to be unable to afford mortgage repayments, and so the repossession rate increased. In 1992, the government increased interest rates to 15% in an attempt to reduce inflation. The main difference between the 1991 crash and the great recession 2008-13 is the difference in interest rates. Why is repossession rate low during credit crunch? In that period, the repossession rate peaked at 0.7% of homes. This repossession rate of 0.07% is significantly lower than the last housing bust and recession of 1991-92. It estimated, that 160,000 mortgages will be in arrears of 2.5% or more by end of 2013.In Q1 2013, the rate of repossession is running at 0.07% or 1 in 1,400 homes. For 2013, the Council of mortgage lenders anticipate a total of 35,000 repossessions.Mortgage arrears – when mortgage holders fall behind in their mortgage payments, but not necessarily leading to repossession.Home repossession – when banks take homes back into their own ownership,.
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