chem1st Posted February 11, 2012 Share Posted February 11, 2012 http://news.bbc.co.uk/1/hi/programmes/moneybox/9695265.stm More than a third of outstanding residential mortgages are currently interest only, but this form of borrowing has fallen badly out of favour with the banks in the last few years. In layman's terms this means that more than a third of people with mortgages whom are classed as "property owners" have interest only mortgages. Over half of the properties in the UK are mortgaged. This means that 1 in 6 properties have an interest only mortgage upon them. What is an interest only mortgage? It is where somebody takes out a loan secured upon a house, and instead of paying the loan off, they only pay the interest. It's like paying the minimum amount of interest on your credit card, so that your debt doesn't increase. So your spending money on the interest upon your debt, and you remain in debt. Instead of spending money into the economy, you **** it up the wall and give it to the usurious banks. This is bad for the economy, it means the economy will contract, as money is extracted from the real economy and given to the banks. As the economy contracts and incomes fall, young people end up being unemployed. These young people don't have an income, as nobody can afford to pay them to do something productive, therefore they don't have savings. They aren't going to be buying your house. They can no longer get interest only mortgages and bid up the price with debt. If you have an interest only mortgage you're are up the proverbial creek and without a paddle. You are but a slave to the banks. And now your fellow countrymen are unemployed, because you're giving all your money to banks. And because they have no income they can't afford to buy the house that you don't own (you merely rent it from the bank). So your house is effectively worthless. Property owning democracy? More like perpetual slavery! Link to comment Share on other sites More sharing options...
anywebsite Posted February 11, 2012 Share Posted February 11, 2012 How many of those are buy-to-let mortgages? Link to comment Share on other sites More sharing options...
medusa Posted February 11, 2012 Share Posted February 11, 2012 And how many of the interest only mortgages also have a endowment or other savings plan which will completely pay off the sum loaned at the term of the mortgage? Link to comment Share on other sites More sharing options...
Guest sibon Posted February 11, 2012 Share Posted February 11, 2012 Mine is a bit of both, so which category would you put me into. My interest only bit is easily covered by some investments though. Investments in real companies doing real stuff. Invested in the economy. Invested in jobs. Have I made my point? Link to comment Share on other sites More sharing options...
chem1st Posted February 11, 2012 Author Share Posted February 11, 2012 How many of those are buy-to-let mortgages? There is ~1.4million B2L mortgages, so assuming all B2L mortgages are interest only (in order to take account of the tax breaks on offer), 1.4/4million+ ish, then ~ 1/3 of them. Link to comment Share on other sites More sharing options...
wednesday1 Posted February 11, 2012 Share Posted February 11, 2012 And how many of the interest only mortgages also have a endowment or other savings plan which will completely pay off the sum loaned at the term of the mortgage? Or have a final salary pension scheme which pays a lump sum on retirement which could be used to pay-off the mortgage? Link to comment Share on other sites More sharing options...
chem1st Posted February 11, 2012 Author Share Posted February 11, 2012 Or have a final salary pension scheme which pays a lump sum on retirement which could be used to pay-off the mortgage? Which is fast being wiped out! Link to comment Share on other sites More sharing options...
wednesday1 Posted February 11, 2012 Share Posted February 11, 2012 Which is fast being wiped out! I know somebody who retired recently with £160k pay-off. Lucky bugger, mortgage long paid off too! His pension seemed to be doing alright. Link to comment Share on other sites More sharing options...
chem1st Posted February 11, 2012 Author Share Posted February 11, 2012 I know somebody who retired recently with £160k pay-off. Lucky bugger, mortgage long paid off too! http://www.bbc.co.uk/news/business-16808403 The trend of final-salary pension schemes closing to both new joiners and current staff appears to be continuing. The proportion of final-salary schemes still open to new recruits in the private sector fell last year from 18% to 16%, the Pension Protection Fund (PPF) and the Pensions Regulator said. They also found 24% of schemes had stopped existing members building up more pension, up from 21% in 2010. AND http://www.ft.com/cms/s/0/b149f532-53f1-11e1-9eac-00144feabdc0.html#axzz1m6nExUZI “With annuity rates falling by about 25 per cent as a result of QE, over a million pensioners will be permanently poorer for the rest of their lives, as they have bought an annuity at rates that have been artificially depressed by the Bank of England,” she said. The times are a changing and changing fast! Link to comment Share on other sites More sharing options...
medusa Posted February 11, 2012 Share Posted February 11, 2012 Can you answer my question now please? You can't throw your hands up in alarm at the number of interest only mortgages without considering that maybe, just maybe, the people who are paying interest for 25 years have also made plans that will actually involve paying off the original sum of the loan. At the very worst case there will be a shortfall of £3000 when mine comes to term in 5 years' time. That's hardly sitting on a nightmare scenario of an interest only mortgage with nothing to back it up, is it? Do you just assume that all home owners are stupid and irresponsible? Or that banks are all lending irresponsibly to people who have no plans at all to pay them back? Link to comment Share on other sites More sharing options...
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