We owe £2 billion on mortgages

The Oxford Times: Freyda Smith with her son Tay Brown Freyda Smith with her son Tay Brown

NEW figures have revealed homeowners in Oxford owe more than £2bn in residential mortgage debts.

Data from the Council of Mortgage Lenders (CML) offers a stark picture of the debts city and county residents have racked up in pursuit of the dream of home-ownership.

And it illustrates the difficulties many people have even getting on the housing ladder.

Oxford, with £2.43bn of debt, is far and away the area of the county with the most serious mortgage issue.

But the amount of debt held by people in both Abingdon and Banbury was shown to be more than £1bn, while Kidlington, Chipping Norton and Didcot sit on around £500m.

The news has led one expert to raise concerns that if interest rates rise, people with large amounts of debt could struggle to meet their repayments.

Jane King, financial author and senior lecturer in accounting finance and economics at Oxford Brookes University, said as the housing market shows signs of rising, so will the amount of mortgage debt.

She said: “The first thing to consider when assessing whether the lending situation will improve is interest rates.

“Historically, they have been low and the only way for them to go is up. If we do see an increase, some people will certainly struggle to pay their mortgages.

“Secondly, house prices are starting to increase and correspondingly so will the amount needed to borrow.”

The total national mortgage debt, according to the aggregate data published by the CML, is around £891bn, with the total for Oxfordshire reported as £10.5bn.

Bernard Clarke, spokesman for the Council of Mortgage Lenders, said: “In a place like Oxford, we would expect these figures to be higher than other areas.

“We’ve seen the kind of patterns we would expect to see in this most recent data. Next year our predictions show the potential for quite a strong revival in the lending market towards the spring.”

Young mum Freyda Smith, 23, from Wood Farm in Oxford, said house prices are already too high to get on the housing ladder.

She said: “I’m not working at the moment because I’m at home looking after my 19-month-old son.

“We would like to own our home, but it’s not an option at the moment. Even finding money to pay for rent and bills is a struggle.

“It’s definitely something we would like to do one day but things will have to change first.”

Property website Rightmove lists the average cost of a terraced property in Oxford over the last year as £377,178, while semi-detached properties had an average price of £386,162.

Across the county, the average terraced home sells for £268,592.

Semi-detached properties sold for an average of £295,374 with detached ones fetching £481,484.

Rodger Richards, 45, of Banbury Road, Oxford, said as a homeowner with a mortgage, he was worried about interest rates rising.

He said: “With that much debt, we should all be concerned, because if people get into trouble with their mortgages it can have a knock-on effect on the economy. It’s a staggering amount of money.”

Comments (3)

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9:50am Fri 27 Dec 13

Andrew:Oxford says...

A closer look at these figures reveal that they are all quite reasonable.

There are 55,400 households in Oxford, of which 47% are owner occupied. That gives us 26,038 owner occupied homes in Oxford.

Now, I've fully repaid my home loan, so that gives us 26,037 homes.

£2,000,000,000 divided by 26,037 homes gives us an average home loan of £76,814.

Using that figure for a 5 year fixed home loan rate of 4.39% gives a monthly repayment of £385.

Which tells us what?

The average Oxford mortgage payment is less than the cost of a monthly season ticket to London on the train (£435.10)

It's also less than the cost of parking in the Westgate 20 days a month (£446.00)
A closer look at these figures reveal that they are all quite reasonable. There are 55,400 households in Oxford, of which 47% are owner occupied. That gives us 26,038 owner occupied homes in Oxford. Now, I've fully repaid my home loan, so that gives us 26,037 homes. £2,000,000,000 divided by 26,037 homes gives us an average home loan of £76,814. Using that figure for a 5 year fixed home loan rate of 4.39% gives a monthly repayment of £385. Which tells us what? The average Oxford mortgage payment is less than the cost of a monthly season ticket to London on the train (£435.10) It's also less than the cost of parking in the Westgate 20 days a month (£446.00) Andrew:Oxford

1:18pm Fri 27 Dec 13

DoctorBob says...

This report highlights the government peddled lie that we have to pay the nations debt down quickly.
They keep telling us national debt is the same as household debt (constant references to paying down the nations credit card).
The more realistic comparison is with mortgagee. They are long term debts, like the governments. Only difference though is that government debt is at far lower interest levels.
It's also why it's disingenuous to compare us to Greece who have short term debt unlike our long term debt.
All Western Liberal Democracies run a debt and always will. When Labour took over from the Tories in 97 the deficit was larger than it was at the rime just prior to the crash making the idea that Labour were profligate a nonsense. The deficit rose because we bailed out the banks.
Another interesting fact, the debt just after the second world war was greater than it is now yet we built hundreds of thousands of council houses and the NHS.
This report highlights the government peddled lie that we have to pay the nations debt down quickly. They keep telling us national debt is the same as household debt (constant references to paying down the nations credit card). The more realistic comparison is with mortgagee. They are long term debts, like the governments. Only difference though is that government debt is at far lower interest levels. It's also why it's disingenuous to compare us to Greece who have short term debt unlike our long term debt. All Western Liberal Democracies run a debt and always will. When Labour took over from the Tories in 97 the deficit was larger than it was at the rime just prior to the crash making the idea that Labour were profligate a nonsense. The deficit rose because we bailed out the banks. Another interesting fact, the debt just after the second world war was greater than it is now yet we built hundreds of thousands of council houses and the NHS. DoctorBob

4:32pm Fri 27 Dec 13

faatmaan says...

perhaps these people might not have been in a position to buy if interest rates reflected the historical average of 9%, the present rates are good but unsustainable, they should have factored in realistic rises in interest rates
perhaps these people might not have been in a position to buy if interest rates reflected the historical average of 9%, the present rates are good but unsustainable, they should have factored in realistic rises in interest rates faatmaan

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