UK HOUSING CRISIS STARTS TO BITE

UK HOUSING CRISIS STARTS TO BITE

ANS: MY HOUSE

AN Englishman's home is his castle, so they say.

By Neville Stack


19 August 2008

AN Englishman's home is his castle, so they say.

But now it has become a nightmare for many.

Like the Sheffield family of four who had nowhere to go after their home was repossessed when they fell behind on mortgage payments.

They now live in their car.

The mortgage was £625,000 ($1.6m) and Laura Whitney and her partner Richard Webster could just about afford the payments. Then they fell into the sub-prime trap.

Their payments soared from £373 a month to £553.

Their home was taken when they couldn't pay.

What's more, they were turned down for private rented housing because the repossession left them with a bad credit rating.

Miss Whitney, who is four months pregnant, said: 'We are making do with tinned food and asking relatives to let us use their facilities. All we need is a home.'

The couple, who have seven-year-old Jessica and Jack, aged two, bought their two-bed home in August, 2006, for £67,000 with a £pounds;5,000 deposit. They had to take a sub-prime mortgage as Mr Webster had a previous credit problem.

When the credit crunch began to bite in December they asked their bank to switch to an interest-only mortgage but were refused. So their home was repossessed in July.

Mr Webster, who works for the Royal Mail and takes home £1,000 a month, said: 'The council offered us temporary housing but because I am working we would have to pay £130 a week, which we cannot afford.'

The nation has always placed great value on being an owner-occupier, but the level of repossessions and re-financing is approaching crisis level

A total of 18,900 homes were repossessed in the first half of 2008 - a 48 per cent increase since the same time last year, according to the Council of Mortgage Lenders.

Experts warned more families will be hit before the end of the year as they are unable to keep up with the rising cost of living.

Borrowers who had previously used re-mortgaging to help manage their payments had been hit the hardest by the credit crunch and the lack of affordable loans, even from the banks who not long ago were begging them to take their money.

The crisis has even got a website: www.housepricecrashuk , where sufferers can compare their sad stories.

Even pets are losing out.

A blogger who signs himself Juvenal wrote to the site:

'At the Cat's Protection League in Bournemouth they told me they were overrun with cats and kittens, because owners are dumping them 'due to the credit crunch'. I asked if owners were so 'close to the wire' they really couldn't afford the upkeep of a cat, and they said some certainly were.

'You can't get away from it folks, the squeeze is really on.'

The situation in UK is bad indeed. But in the US, where it all began, it is even worse.

Thousands of people who thought The American Dream of owning a home had come true were suckered by unscrupulous lenders into taking home loans despite not having a credit rating. At first they could pay the instalments. Then the rates always went up.

Most of the families just walked out, heartbroken.

And now they had to face being blacklisted by the credit-rating outfits.

- The writer is a former editor-in-chief of the Leicester Mercury in the UK. He has also worked in Singapore.