A modest increase in interest rates could render almost 25 percent of UK households in severe financial stress, a report from the Resolution Foundation (RF) reveals. High levels of household debt – resulting from consecutive years of easy credit – mean even a moderate rise in interest rates could create profound financial struggle for one in four households in the UK which will be simply unable to sustain their mortgages.
Despite a five year run of exceptionally low interest rates, many UK mortgage holders have struggled to pay their debts as a result of a troubled jobs market and very low wage growth.
Bank of England governor Mark Carney noted that many UK families are financially vulnerable, having overstretched their budget to get on the property ladder. The number of UK mortgage holders spending more than 33 percent of their income on debt repayments could skyrocket from 1.1 million today to 2.3 million by 2018. The number of UK households in "debt peril" – meaning they are allocating more than 50 percent of their income on mortgage repayments – could mushroom from 600,000 to 1.1 million by 2018.
More than half of Britons say they have been hit with extra fees on their credit cards, bank accounts mortgage or insurance in the last year. Two thirds say lenders and insurers are tricking them with dubious and difficult to compare headline prices. A survey conducted by the consumer campaign group Which? showed that 68 percent of 2,000 Britons polled feel that companies use additional charges to trick them.
Which? believes that in order to appear at the top of price comparison websites, insurance firms artificially kept the headline figure for their premiums below average hiding the extra charges in small print. It says these tactics are also being used by financial companies on mortgages, credit cards, bank accounts and all types of insurance.
“Consumers are fed up with being hit with unexpected, additional costs for financial products that lead to them paying more than they bargained for,” Richard Lloyd, the Which? executive director said. “We want the financial services industry to stop sneaky fees and charges, and put an end to excessive, unclear and hard to compare fees that do nothing to improve the low level of trust in these markets.”
Despite a five year run of exceptionally low interest rates, many UK mortgage holders have struggled to pay their debts as a result of a troubled jobs market and very low wage growth.
Bank of England governor Mark Carney noted that many UK families are financially vulnerable, having overstretched their budget to get on the property ladder. The number of UK mortgage holders spending more than 33 percent of their income on debt repayments could skyrocket from 1.1 million today to 2.3 million by 2018. The number of UK households in "debt peril" – meaning they are allocating more than 50 percent of their income on mortgage repayments – could mushroom from 600,000 to 1.1 million by 2018.
More than half of Britons say they have been hit with extra fees on their credit cards, bank accounts mortgage or insurance in the last year. Two thirds say lenders and insurers are tricking them with dubious and difficult to compare headline prices. A survey conducted by the consumer campaign group Which? showed that 68 percent of 2,000 Britons polled feel that companies use additional charges to trick them.
Which? believes that in order to appear at the top of price comparison websites, insurance firms artificially kept the headline figure for their premiums below average hiding the extra charges in small print. It says these tactics are also being used by financial companies on mortgages, credit cards, bank accounts and all types of insurance.
“Consumers are fed up with being hit with unexpected, additional costs for financial products that lead to them paying more than they bargained for,” Richard Lloyd, the Which? executive director said. “We want the financial services industry to stop sneaky fees and charges, and put an end to excessive, unclear and hard to compare fees that do nothing to improve the low level of trust in these markets.”
1 comment:
A similar situation in Australia...very high house prices and rents versus relatively low interest rates for the moment and social housing being almost totally missing from the supply end.
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