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Worrying number of UK mortgagees won’t finish paying before retirement
Nearly one in three people with a repayment mortgage in the UK won’t repay it until they’re 60 or older, new research suggests, and it means they may have to delay retirement plans. Of the people who know they have a repayment mortgage, 31.7% will not have finished paying it off until they are aged 61 or over and of these, nearly one in 20 will be aged over 70, according to the research conducted on behalf of mortgage and secured loans broker Ocean Finance. The firms says that still be repaying a mortgage after retiring is a worrying situation to be in, as home owners will no longer have a regular salary coming in and will have to rely on their pensions and savings to clear the remaining debt. The fact that more than a million people in the UK will still be repaying a mortgage when they’re over 71 years old is of particular concern. The age of the average UK home owner when they finish paying off their repayment mortgage is between 51 and 60 years old. However, for nearly one in three mortgage holders this goal is further off, and not something they will achieve until they are aged over 60, should they continue making repayments at their current rate. In the UK, the default age of retirement has now been phased out and most people have the right to continue working for as long as they want to. However, long term mortgage commitments mean the equivalent of seven million home owners will still be tied into a mortgage after they’ve reached 60, and so may have to abandon their personal retirement aspirations in favour of staying in employment for longer than they originally planned. Across the country, repayment mortgage customers living in the East Midlands are most likely to still be paying off the debt when they are over 61 years old with 18.7% in this position. Meanwhile, residents of the South West are the most likely to have paid off the entire debt, with just 7.8% of mortgage holders here set to still be repaying it once they are past their 61st birthday. ‘It’s great that most people will have repaid their mortgage before they retire, but the fact that nearly one in three mortgage customers will still be repaying it once they’re aged over 61 is worrying,’ said Ian Williams, spokesman for Ocean Finance. ‘Not long ago, most homeowners would have paid off their mortgage by the time they reached their 50s and so could enjoy living a few years mortgage free before they retired, or even choose to retire early. But as the average age of first time buyers continues to rise, millions are now in a situation where they won’t have finished repaying their mortgage until they’re about to retire,’ he explained. ‘For those that can afford to do so, and where the provider allows it, overpaying the mortgage each month can knock years off the term of your mortgage, which… Continue reading
Property value growth in Australian capital cities slows, latest monthly index shows
Residential property value growth in capital cities in Australia didn’t really move last month with the market pausing for a breather, according to the latest RP Data Rismark home value index. The combined capital cities index recorded no change overall during February with Sydney, Hobart and Darwin the only capital cities to record a slight lift in dwelling values. The index recorded zero month on month growth. This follows eight successive monthly increases where dwelling values rose by 10% and values are up 13.2% since June 2012. Also, recent growth has taken capital city dwelling values to 4.8% higher than their previous peak in October 2010. ‘The February market results are in stark contrast to earlier readings where capital city dwelling values moved 2.6% higher over the past three months. The likelihood is that the weak reading for February is an adjustment from the strong readings in December and January rather than the beginning of a flat to negative growth phase across the macro level housing market,’ said TP Data research director Tim Lawless. Additional metrics tracked by RP Data show that buyer demand remained very strong in February with RP Data’s valuation platforms recording a record month for average daily levels of mortgage related activity. Also, auction clearance rates remained strong and with little slippage in vendor discounting levels or average selling times. However, Lawless said there will need to be further months of flat to negative movements before it can be said confidently that the housing market is slowing. ‘Our view is that housing market conditions will start to wind down later this year as affordability constraints and low rental yields dampen market conditions. Additionally, with a belief that mortgage rates are likely to start tightening later this year, it may help to quell some of the exuberance we have been seeing,’ he explained. Rismark International chief executive officer Ben Skilbeck, pointed out that Sydney continued to be the standout performer. ‘When looking at individual capital cities, the Sydney market has had a surprising run of nine successive month end increases totalling 14.1%. In keeping with what other capital cities have experienced, we would have expected some dips along the growth trajectory over a nine month period,’ he said. ‘Despite the recent strong Sydney capital gains, over the past decade Sydney values have compounded at just 2.9% per annum. Arguably this market is playing catch up before settling into a more sustainable rate of growth,’ he added. The February results show that the premium end of the housing market continued to gather pace while at the more affordable end of the market, capital gains have been slowing. Dwelling values across the most expensive quarter of capital city housing markets are up 3.8% over the three months to February 2013, and 6.8% over the past six months while homes at the most affordable end of the market have seen values remain flat over the past three… Continue reading
