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Home arrow Financial News arrow Mortgage News arrow Debt crisis surfaces on Mortgage
Debt crisis surfaces on Mortgage Print E-mail
Wednesday, 13 September 2006
A survey of 2,000 homeowners by the CAB found that 13% of under 24-year-olds had missed payments, with 4% of the total admitting to missing payments.  Research from Citizens Advice estimates that 770,000 households have missed one or more payments, and the situation could become worse as interest rates rise.

Banks have been criticized for relaxing lending criteria to make it easier for people to get on the property ladder. Some lenders are prepared to lend up to six times a person's salary, while others are offering mortgages of 100% of the property's value or more.

The Coventry Building Society is currently offering a 125% mortgage, which is 95% mortgage and 30% personal loan.

According to the Council of Mortgage Lenders, first time buyers are borrowing the largest multiple of their salary on record. The average first time buyer will borrow three times their salary, the group said.   David Harker, chief executive of CAB, said: 'There is a clear need for more information and advice about the consequences of taking on financial commitments, particularly for younger adults.'

The charity has dealt with over 50,000 inquiries about arrears on mortgages and secured loans in the past 12 months.

Repossessions have hit over 8,000 in the past six months, their highest since 2001. Bankruptcy and Individual Voluntary Arrangements have also soared in recent months.

It is expected that interest rates will be raised to 5% before the end of the year as the Bank of England struggles to keep inflation under control. That would put even more pressure on those homeowners on variable and tracker mortgages.


Edwina Baniqued

 
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