Who's to blame ?

[modeller]

http://www.bbc.co.uk/news/uk-11749185

A million to repay home loans after they retire.
More than a million people took out new or extra morgages in their 40s and 50s . Morgages which they couldn't afford or were for 30 or 40 years and now they find as they enter retirement that they can not afford the repayments.
Who's to blame ? What can be done ?

[rov1200]

Nobody could have predicted that the Bank Rate could have fallen to such low levels. Many mortgages are tied to this bank rate so those lucky enough to be alligned must be over the moon. Some couples fixed the mortgage rate so they knew at the outset what their repayments would be. It is a far off cry when Norman Lamont see the bank rate go as high as 16% just a few years ago and then you could feel sorry with those who had a mortgage, but not now.

Nobody who took out a mortgage 10 years ago should be in dire straights. They could always downsize, either property or area, and be sitting on a nice balance. They could even redeem the mortgage and be left with a profit.

[ABerrant]

It was not difficult to predict Bank Rates being maintained at (artificially) low levels when you realise that what would have been the the primary driver of inflation - mortgages - was left out of the equation to calculate the base rate.

If RPI had not been supplanted by CPI increases in house prices would have been kept in check by modest inflation instead of allowing the bubble to expand unhindered.

[boxtops]

Easier said that done though, rov, that certainly doesn't apply to me. To downsize round here would now cost roughly what my current house is worth, plus all the expenses and upheaval of moving. I'm still paying my mortgage past normal retirement age, I knew I would have to when I took it on 12 years ago, but I hadn't reckoned on how much my limited savings would depreciate over the years, or how much other necessities would go up, whilst on the other hand we have a pay freeze to contend with. Times are certainly hard.

[Gromit]

So, if you enter into a financial agreement that you will pay over 30 years, but you stop eaning after 20 years, 10 years short, who is to blame?

Well, you for being an idiot. Just being stupid is not a defence.

[Gromit]

No, that is a bit obvious, how about Belize?

[Gromit]

Please ignore the answer above,.

[modeller]

You may be right Gromit but it is a problem . Have you any suggestions ?
rov suggested they downsize which might help those whose debt isn't too high but how about those with a hugh debt or those who may even be in negative equity.

rov I didn't quite understand your other suggestion. # They could even redeem the mortgage and be left with a profit. # . Would that leave them homeless ?

[modeller]

I've just read that many of these home loans were not used to buy or extend their homes but was used to buy cars , holidays , or to boost their income. In those cases it becomes a straight debt and even more difficult to resolve in retirement.
http://www.aviva.co.u...tomers-spend-their-l/