Shortfall fears for mortgage holders
By Anonymous on May 02, 2013 02:28 am 1 May 2013 Last updated at 19:01 ET By Kevin Peachey Personal finance reporter, BBC News 
Interest-only mortgages were very popular in the run up to the financial crisis
More than a million people with interest-only mortgages face a financial crunch when they have to pay them off, a watchdog is warning.
Some 2.6 million UK householders hold these mortgages but nearly half will not have enough in savings or other funds to cover the final bill.
The average shortfall is £71,000, according to research for the Financial Conduct Authority (FCA).
Lenders will now step up warnings to homeowners to prevent payment shocks.
Mortgage timebomb Homeowners with these types of mortgage - about a third of all UK mortgage holders - make repayments each month that just cover the interest on the amount borrowed.
The full amount of the home loan should be paid back when the mortgage term matures - usually after 25 years - using funds such as savings, inheritance or from the sale of a business.
These mortgages were popular when sold alongside an endowment policy in the 1990s, and again during the last decade when many homeowners banked on the rising value of their home to cover the cost.
Continue reading the main story 'Pressure' facing mortgage holders
Rob McGregor, 42, from Reading, pays more than £900 a month and will still have £188,000 to pay off at the end of the mortgage term in 18 years.
He already needed to make repayments on other loans and said that an interest-only mortgage seemed like the best option.
"I needed a mortgage that I could pay less into each month. But now I regret choosing interest-only," he said.
"It can be quite upsetting."
He said it was a struggle to make ends meet. The financial pressure means he has to look for deals in supermarkets, and he is finding it difficult to set money aside in savings.
This led to fears of a mortgage timebomb, which prompted the agreement of new rules to tighten up on the sale of these mortgages from April 2014.
'Regret' The FCA, the successor of the Financial Services Authority as the sector's watchdog, commissioned research to give a clear indication of what borrowers face when mortgages mature between now and 2014.
Market research firm GfK NOP questioned 1,103 interest only borrowers to consider how prepared they were to repay their loans.
It found that 37% of interest-only mortgage holders said they faced a shortfall in their plans to pay back the lump sum of the home loan, based on their own sums.
This included people like Rob McGregor who said that taking out such a mortgage seemed a good idea at the time, but was now something he regretted.
"It is a pressure. It can be quite upsetting sometimes when you look at your finances and think I have this huge debt hanging over me all the time," the 42-year-old said.
While many people realise they might have a problem paying back the home loan when the time comes, others are more oblivious of the issue.
The FCA says "estimates suggest" many people underestimated the financial problem and says it believes 48% of holders of such mortgages face a shortfall.
Continue reading the main story Who is affected and when?
- People approaching retirement who took out endowment policies in the 1990s and 2000s. Typically they have high incomes and live in the South East or South West of England. The peak in policies maturing is in 2017-18
- Less affluent, middle-aged homeowners who often converted to interest-only in 2003-09. Concentrated in the South West, East and North West of England, as well as London and the West Midlands. Maturity peaks in 2027-28
- People who are highly indebted and opened mortgages in 2005-08. Maturity of these home loans peaks in 2027-28
This could mean some are not likely to receive all the savings income or inheritance that they might expect.
More critically, one in 10 - the equivalent of 260,000 people - have no repayment strategy in place at all. They face the prospect of having to sell their homes when their mortgage matures.
'Help available' The watchdog said that those facing a shortfall, even if their final bill is looming within the next 10 years, should be able to find a viable way to pay the home loan back.
"By acting now we are aiming to nip this problem in the bud," said Martin Wheatley, chief executive of the FCA.
"My advice to borrowers is not to bury their head in the sand - take action now."
Mortgage lenders have agreed to write to borrowers to ensure they have a repayment strategy in place, concentrating on those whose policies mature first.
"Anyone with an interest-only mortgage maturing before the end of 2020 should expect to be contacted over the course of the next 12 months by their lender," said Paul Smee, director general of the Council of Mortgage Lenders.
"The aim is not to force customers to take actions they do not wish to, but to ensure they are aware of their mortgage repayment position, and have an opportunity to take steps that may prove useful to them in avoiding unforeseen payment shocks later."
Paul Broadhead, of the Building Societies Association (BSA), said that this type of mortgage had worked well for many people, but help was available for those who found themselves in trouble.
"Building societies and other mutual lenders will deploy all the tools they have to help anyone who has an interest-only mortgage with a shortfall. This will only work if people respond to the communications they receive and engage early with their lender," he said.
But the consumer group Which? said that it was vital that people trapped in their current mortgage deals were treated fairly by their lenders.
Read in browser » 
Jury visits April Jones's home town
By Anonymous on May 02, 2013 01:52 am 2 May 2013 Last updated at 01:52 ET 
Mark Bridger denies abducting and murdering April Jones
The jury in the trial of a man accused of murdering missing April Jones in a sexually motivated attack is due to visit the five-year-old's home town.
Mark Bridger, 47, from Ceinws, Powys, denies abducting and murdering April, who disappeared near her home in Machynlleth on 1 October 2012.
On Thursday, the jury will visit key locations in connection with the case.
Prosecutors told Mold Crown Court on Wednesday that tests proved blood found at Mr Bridger's home was April's.
Elwen Evans QC said Mr Bridger burned evidence in his fire and used detergent as part of an "extensive clean up".
But blood stains at various locations around Mr Bridger's house matched April's DNA, the court heard.
Ms Evans said that when the prosecution referred to a one-in-a-billion match "that is, in fact, April's blood".
And tests on bone fragments at Mr Bridger's house "strongly support" the fact they came from a human skull, she said.
The prosecution had outlined Mr Bridger's movements on the day of April's disappearance.
He had approached two young girls - aged eight and 10 - who were playing on bicycles, the court was told.
One was friendly with his daughter and he invited her for a sleepover but she declined and he drove away.
Earlier in the day he had propositioned three women via Facebook asking two of them to meet up "with no strings attached".
He had also exchanged texts with a former girlfriend about their break up.
Mr Bridger had told police during interviews he had accidentally hit April with his car and "panicked", the jury was told.
"I didn't abduct her. I did my best to revive her," he said.
The trial continues.
Read in browser » Polls open in England and Anglesey
By Anonymous on May 02, 2013 02:06 am 1 May 2013 Last updated at 20:09 ET 
The results will be declared on Friday
Voters across England go to the polls later to decide the outcome of council elections and a parliamentary by-election in South Shields.
Elections are being held in 27 English county councils and seven unitary authorities, last contested in 2009, as well as in Anglesey in Wales.
Labour are defending the South Shields seat in a contest caused by the resignation of David Miliband in March.
Mayoral contests are also being held in Doncaster and North Tyneside.
Polls for all the contests will open at 0700 BST, closing at 2200 BST.
More than 2,300 seats are up for grabs in county council and unitary authority elections across the length and breadth of England, including Derbyshire, Lancashire, Somerset, Essex, Surrey, Leicestershire, Kent, Durham, Bristol and Cornwall.
No elections are taking place in London, Scotland or Northern Ireland.
Read in browser » UK gambler jailed for US killing
By Anonymous on May 02, 2013 02:45 am 2 May 2013 Last updated at 01:06 ET 
Marcus Bebb-Jones admitted killing his wife Sabrina in 1997
A British professional poker player has been jailed for 20 years in the US for killing his wife.
Marcus Bebb-Jones, 49, was arrested at his home in Kidderminster, Worcestershire, in 2009 and extradited to Colorado two years later.
He admitted second-degree murder, telling police he killed his wife Sabina in a "heat of passion".
The couple ran a hotel in the state when she disappeared in 1997. Her skull was found in 2004 in a national park.
In recent years Bebb-Jones had been known for a stint on the online and casino poker circuit, winning thousands of pounds in prize money.
Following his wife's disappearance, he went on a Las Vegas "playboy weekend", partially funded by his wife's credit cards.
He then shot himself in the head in a failed suicide attempt. Bebb-Jones moved back to the UK with his son in 1998, after selling the hotel.
He was jailed at Garfield County Court and his sentence will be reduced by the time he has already served awaiting the trial.
Read in browser » N Korea jails US man for 15 years
By Anonymous on May 02, 2013 02:57 am 1 May 2013 Last updated at 22:32 ET 
North Korea says it has sentenced a US citizen to 15 years of hard labour.
The announcement, from state news agency KCNA, said Pae Jun-ho, known in the US as Kenneth Bae, was tried on 30 April.
He was held last year after entering North Korea as a tourist. Pyongyang said he was accused of anti-government crimes.
The move comes amid high tensions between North Korea and the US, after Pyongyang's third nuclear test.
Read in browser » Soldiers killed in Afghanistan named
By Anonymous on May 01, 2013 05:34 pm 1 May 2013 Last updated at 15:30 ET
Three British soldiers who died after their armoured vehicle was hit by a roadside bomb in Afghanistan have been named.
They were Cpl William Savage and Fusilier Samuel Flint from the Royal Highland Fusiliers, the 2nd Battalion The Royal Regiment Of Scotland
The third soldier was Pte Robert Hetherington, of the 51st Highland, 7th Battalion.
Six other soldiers were injured in the bomb blast in Helmand on Tuesday.
The attack was on a Mastiff vehicle, deemed one of the safest. David Cameron said he would consider "carefully" how the deaths had occurred.
It is the first time British soldiers in a Mastiff vehicle, which was introduced in 2007, have been killed by a roadside bomb, the MoD said.
Cpl Savage, 30, leaves behind a wife who is expecting their first child.
In a statement, Lyndsey said: "I am completely devastated by this news but extremely proud of 'Sav' and everything he has achieved.
"I have lost the love of my life and the father of our son."
Brigadier Rupert Jones, commander of Task Force Helmand, said: "The loss of these three brave Scottish soldiers comes as a great blow to everyone in the Task Force, but leaves us all the more determined in our task to do justice to their memory."
The blast occurred when the soldiers were travelling on a routine patrol in the Nahr-e Saraj district.
Afghan officials in Helmand told the BBC the bomb was made with "potent explosives and had metals and other items aimed at inflicting massive destruction".
Read in browser » 
No comments:
Post a Comment