The number of borrowers seeking help with mortgage arrears has escalated sharply. Citizens Advice reports that homeowners in England and Wales saw mortgage arrears problems rocket by 35 per cent in the first two months of 2008 compared with the same period in 2007. The figures also show that more and more people are struggling to afford basic essentials such as gas and electricity, water, telephone and council tax bills. But flashing the plastic remains our greatest downfall, with debts relating to credit cards, store cards and charges cards accounting for the lion's share of cases advised on by the charity.
The amount we're borrowing. First-time buyers are taking fewer risks this year, borrowing lower multiples of their incomes and putting down slightly larger deposits. According to the Council of Mortgage Lenders, the average first-timer borrowed 3.32 times their income in January, down from 3.38 in December, putting down a 12 per cent deposit, up from 10 per cent. People moving home were also more cautious, borrowing an average of 70 per cent of their property's value in January, compared to 73 per cent in December. Movers borrowed 2.97 times their income in January, down from 3.04 the month before.
GO FIGURE... 25 years
The amount of time Alistair Darling would like us to fix our mortgages for. In last week's Budget, the Chancellor insisted that long-term fixed rates were the key to financial stability for homeowners, and said he would "seek views for a framework to deliver" such arrangements. Sound familiar? In 2003's Budget Gordon Brown commissioned a report "to examine the case for, and how, Britain can develop a market for long-term fixed mortgages". In fact, a handful of lenders have offered 25-year fixed-rate mortgages for years, but have had very little uptake. The truth is that UK borrowers don't like to commit for that long.
Paula John is editor-in-chief of Your MortgageReuse content