Saturday, 4 August 2007

The Debt Disaster: UK repossessions hit eight-year high

"Those who lend money without charging interest, and who cannot be bribed to lie about the innocent. Such people will stand firm forever." Psalm 15:5

[...] Nearly 2 million homeowners will be coming out of fixed-rate mortgage deals in the next 18 months and find themselves having to renegotiate terms with interest rates 1.25 percentage points higher.

The CML said that 125,100 homeowners had mortgage arrears of three months or more, 4% higher than the six months to the end of December, but 3% lower than for the first half of 2006.

The housing charity Shelter criticised irresponsible lending to people who could not afford the repayments.

The Liberal Democrat Treasury spokesman Vince Cable said borrowers needed to be fully aware of the risks.

"These figures demonstrate the complete absence of an adequate safety net in the mortgage market. There is currently a considerable degree of irresponsible lending and aggressive marketing to individuals," he said. "The government should be actively working with the financial services industry to achieve a national roll-out of independent advice centres, providing people with early access to financial health checks before they get into a crisis." Read more

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  1. (Chelmsford, Essex)

    John, I have followed your link to your (undated but not new article Losing Interest. And I see your point. But what am I to do as someone who currently depends on interest income to live on? Is it wrong that I invest that money in a way which allows relatively poor people to buy homes to live in? And just because the interest is relatively fixed and the risk is relatively low? Why, apart from Luther's arbitrary distinction, is it right for me to own shares in a company, which may go down as well as up, but wrong to own shares in a mutual building society because the rates are fixed? Now if I was motivated by greed, I could doubtless play the stock market with investments of the kind you approve of and make myself a larger income, with a risk of course if the stock market crashes. But instead I prefer to leave myself time for Christian work (and blogging) by investing my money in a simple way which helps others to buy homes, set up businesses etc. What is wrong with that?

    Yes, some mortgage lenders are irresponsible, and so are some borrowers. Borrowers know the risks when they borrow. Why don't you let them bear the risk instead of insisting that lenders should do?

  2. Peter

    I've posted an article which addresses some of these questions. I hope you don't feel it is 'getting at you' - they are good questions and need to be considered carefully. I hope that the CS Lewis quote will show where I'm coming from on this - it is a quote that has long stuck with me.