Housing News

The Brits Have Changed Habits, But Have We?

We compare the latest repayment statistics.

The recession has taught Britons a very important lesson: never fall behind your mortgage payments. In the latest report by The Bank of England, tighter bank lending has pushed unemployment figures in one of its worst periods but that didn’t stop mortgage debtors from paying a total of £8.1 billion or US$13.2 billion in the last quarter of the previous year – an all-time high since 1970. Sky News adds, “The rate at which people are repaying their mortgages has also continued to accelerate compared with the final quarter of last year, when home-owners made net mortgage repayments of £7.76bn, according to the Bank of England. Homeowners’ focus on paying down their mortgages is in stark contrast to figures for the same period of last year, when people released £6.73bn from their properties to fund large purchases. But even that was a far cry from the record £17.1 billion of equity that was unlocked during the final quarter of 2003.” Good or bad, the effects are mostly upbeat for most analysts. In an interview by Bloomberg News, economist Colin Ellis explains, “Homeowners are clearly and sensibly taking matters into their own hands, rather than just sitting around waiting for the market to eventually pick up.”

On the other hand, Americans are still struggling to change the pace of their mortgage payments as the Mortgage Bankers Association of America reports that in March, a total of 11.18 percent have defaulted in their mortgages. The Federal Housing Administration on the other hand found out that 16.6 percent of their borrowers have been delinquent. Worse, the Private Insurance Companies of America said that in February, 89,722 insured borrowers were 60 or more days in arrears, a 16 percent increase in their records.

But this doesn’t mean that we haven’t taken our debts seriously. For one, our unemployment figures have remained disappointingly low even if the past months have shown some slight improvement. This adds pressure to distressed homeowners who are still coping with the effects of recession. Second, not all mortgage lenders have been cooperating with the government’s mortgage modification programs, causing the failure of some plans to thwart the intended increase in mortgage applications and lower default rates. Finally, the government’s participation in the massive bond buying hasn’t created a significant impact in the lowering of mortgage rates thus, realizing the fears of some analysts that external influences aren’t enough to move the market positively.

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