Housing Solicitors

The International Monetary Fund (IMF) has warned that the UK’s obsession with borrowing money to buy a house has burdened Britain’s economic recovery.

The IMF has singled out both the UK and Portugal – which had to have a bailout – in its Global Financial Report.

The report says that families in Britain are obsessed with buying their own home – and advises that housing supply must be increased.

The UK has seen spiralling house prices over the last decade, with rents also increasing rapidly, as those unable to afford to buy their own home compete for affordable rental properties.

Homeowners wishing to upgrade to a larger home also sparked a remortgaging boom in 2014.

The report warns:

“High debt levels in the private sector continue to hinder growth and financial stability.

“Gross household debt in Portugal and the United Kingdom is projected to remain high, compared with that of other advanced economies.

“Containing financial stability risks from housing and mortgage markets remains important.”

The Daily Mail reports that IMF figures show household debt in the UK in 2014 was worth 87.1% of gross domestic product (total economic output).

In Portgual, debt was running at 82.6% of GDP in 2014, compared with 76.9% in the US.

Across EU member states, debt levels are lower – at 72% of GDP in Spain, around 55% in Germany and France and just over 40% in Italy.

The Daily Mail says that in a separate report from MoneySuperMarket.com, a total of 13 million Britons will fall further into debt in 2015 – a 40% cent increase on 2014 figures.

A survey of 2,00 people revealed that – of the two-thirds of UK adults already in debt with credit cards, overdrafts and loans – one-quarter will go on to borrow even more money just to cope with their current debts.

Kevin Mountford from MoneySuperMarket.com said:

“It’s important that those relying on credit keep in control of the situation, so their debt doesn’t spiral out of control.

“Simply working out a realistic monthly budget and cutting out unnecessary expenditure should be the first step.”

Lenders introduced stricter lending criteria for mortgage applicants in April 2014, after the Bank of England raised concerns that homebuyers might overstretch themselves using Help to Buy – which enabled homebuyers to buy a home valued at up to £600,000 with just a 5% deposit, meaning they might be unable to afford mortgage repayments once interest rates started to climb again.

Duncan Lewis Housing Solicitors

Duncan Lewis housing solicitors can advise homebuyers and homeowners on a wide range of issues, including debt management and mortgage repossession.

Duncan Lewis is a leading firm of Legal Aid housing solicitors and also offers competitively priced conveyancing services, including guiding first-time buyers through the conveyancing process.

For expert legal advice on housing matters, call Duncan Lewis housing solicitors on 020 7923 4020.