Mortgage Collapse – 400,000 Struggle to Pay

They face an increase of £250 a month from £610 to £860 a month with mortgage rates of 5.5%. That’s the current average for people considering re-mortgaging after Thursday’s rate hike by the Bank of England.

And for these households, monthly housing costs increased from 38% to 54% of their monthly income, more than half of their income, researchers from the Joseph Rauntree Foundation found.

The warning comes in the wake of the biggest increase in bank interest rates since the 1980s.

The central bank’s monetary policy committee has raised the base rate by 0.75 percentage points to 3%.

The eighth consecutive rise was accompanied by bleak predictions that the UK was headed for what could be its longest recession in a century.

Prime Minister Jeremy Hunt acknowledged the difficulties facing homeowners. He admitted the move would be “very tough for families with mortgages across the country.”

But he said it needed to act now to avoid tougher measures in the future.

“If we want to keep interest rates from rising, the best thing governments can do is show they’re reducing their debt,” Hunt told the station. I have to take it,” he said. We must do the same with governments. ”

The 400,000 homeowners who make up another 120,000 households will be in dire straits in the next year.

Currently, 750,000 households or 2.4 million property owners live in poverty.

And this share of homeownership households will increase from 10% in 2020/21 to 12% this year.

A family is considered to be in poverty if its income is below 60% of the median household income.

For couples without children, the average income in 2020/21 was £24,600.

So if your annual income is below £14,800, you are below the poverty line.

“Governments should be rightfully concerned about the looming mortgage crisis and the crisis private renters are already facing,” said Darren Baxter-Clow, Senior Policy Advisor at Rowntree.

“Aid will help impoverished mortgage holders, those who may be pushed into poverty and at risk of losing their homes because of housing costs, and the private sector facing already rapidly rising costs. must be targeted at lessees of

“But any help should not only prop up a collapsing housing market. Too many people have been trapped in the inaccessible, precarious and poor quality private rental sector.

“All crisis aid must end the current cycle of booms and busts and work towards a healthier and more equitable housing system.”

Household budgets are set to stretch further with tax increases and spending cuts due to be announced by Hunt (left) in his November 17 fall statement.

“Keep paying as much as you can. This is advice for anyone struggling with mortgage payments,” said Graham O’Malley, senior debt expert at Citizens Advice.

“There’s help out there. Talk to your lender, talk to us at Citizen Advice or other debt charities.

“If a fixed-rate deal is nearing its end, it will almost inevitably result in more payments.

“But even with the mortgage market changing rapidly, it is still worth hunting around and negotiating with lenders for a better deal.”

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