Tag Archives: debt
Thousands of home owners with interest only mortgages have no pay off plan
Up to one in 10 home owners aged 55 and over across the UK are still paying interest only mortgages with some unsure of how they will pay off their debt. Research shows that 10% of the 1.4 million owners in this age group still paying a mortgage have an interest only deal, amounting to 143,500 households, according to research from Homewise. It also found that while the majority are confident of clearing the debt some 17%, or 24,300, admit they will be unable to clear the debt. The average amount owed by over 55s with interest only mortgages is around £91,000 with one in seven owing more than £150,000. Homewise, which offers the Home for Life Plan enabling over-60s to buy homes at discounts of up to 59% under a lifetime lease, is urging those with interest only issues to start planning ahead. The Council of Mortgage Lenders estimates that at end of 2015 there are around 1.7 million pure interest only mortgages outstanding with another 500,000 part repayment and part interest only loans. That represents a major success by mortgage lenders and the Financial Conduct Authority which has campaigned since 2012 to help borrowers focus on repaying loans and the number of outstanding interest-only loans has been cut from 3.2 million in three years. Mark Neal, managing director at Homewise, said that the mortgage industry has made massive strides in tackling the interest only issue and has helped borrowers to take action and it is good news from the research that the majority have plans in place to ensure they can pay off the capital but there are still substantial numbers who do not appear to know what they will do. Homewise’s research also shows 34% of over 55s plan to clear their interest only mortgage with cash from savings and investments while 10% aim to use pension cash to clear the debt. Another 11% are banking on an inheritance. Continue reading
Research reveals how student debt is affecting the US housing market
New research suggests that the vast majority of would be first time buyers in the United States believe they can’t afford to buy because of student debt. Some 71% of non-homeowners repaying their student loans on time believe their debt is stymieing their ability to purchase a home, and slightly over half of all borrowers say they expect to be delayed from buying by more than five years. The survey from the National Association of Realtors (NAR) and SALT, a consumer literacy programme provided by American Student Assistant, also revealed that student debt postponed four in 10 borrowers from moving out of a family member's household after graduating college. Nearly three-quarters of non-homeowners polled in the survey believe their student loan debt is delaying them from buying a home. Broken down by each generation and debt amount, the percent share is the highest among older millennials approximately aged 26 to 35 at 79% and those with $70,000 to $100,000 in total debt. Regardless of the outright amount of student debt, more than half of non-homeowners in each generation report that it's postponing their ability to buy. The survey, which only polled student debt holders current in their repayment, yielded responses from borrowers with varying amounts of debt from mostly a four year public or private college. Some 43% of those polled had between $10,001 and $40,000 in student debt, while 38% had $50,000 or more. The most common debt amount was $20,000 to $30,000. Lawrence Yun, NAR chief economist, said that the survey findings bring to light the magnitude student debt is having on the housing market and the budget of even those financially able to make on-time payments. He pointed out that while obtaining a college degree increases the likelihood of stable employment and earning enough to buy a home, many graduating with this debt are putting home ownership on the backburner in part because of the multiple years it takes to pay off their student loans at an interest rate that's oftentimes nearly double current mortgage rates. ‘A majority of non-home owners in the survey earning over $50,000 a year, which is above the median US qualifying income needed to buy a single family home, reported that student debt is hurting their ability to save for a down payment,’ he said. ‘Along with rent, a car payment and other large monthly expenses that can squeeze a household's budget, paying a few hundred dollars every month on a student loan equates to thousands of dollars over several years that could otherwise go towards saving for a home purchase,’ he added. Among non-homeowners who believe student debt is delaying their ability to buy, over three quarters, including over 80% of millennials, said their delay is because they can't save for a down payment. Additionally, 69% don't feel financially secure enough to buy, and 63% can't qualify for a mortgage because of high debt to income ratios. Some 52% of those polled expect to be… Continue reading
