Majority of homeowners in UK to be mortgage-free within THREE years

By Becky Barrow

PUBLISHED: 18:36 EST, 21 September 2012 | UPDATED: 18:36 EST, 21 September 2012


Paid in full: According to the report 50 per cent of those with mortgages will own the homes outright as fewer younger people have been able to get on the property market

Paid in full: According to the report 50 per cent of those with mortgages will own the homes outright as fewer younger people have been able to get on the property market

Most homeowners in Britain will not have a mortgage on their property within three years, a ground-breaking report revealed yesterday.

With few young couples able to take mortgages out, the profile of homeowners has changed dramatically.

By 2015, more than 50 per cent of homeowners will be older ‘mortgage-free’ households with a home that they own outright.

Many of those will be people who took a mortgage out in Britian the 1960s, 70s and 80s and are now reaping huge financial rewards.

House prices have soared over the past three decades, and the average house price is now around £160,000 - and far higher in London and parts of the South.

For example, a homeowner in a property worth £400,000 is living in the equivalent of a property worth more than 15 years of the average full-time salary.

By contrast, younger couples are finding it increasingly difficult to get on the property ladder.

Young people, who typically buy with a large mortgage, are forced to rent or to live with their parents.

The phenomenon is also being fuelled by homeowners taking advantage of the lowest interest rates in history to pay down their mortgage.

It is more than three years since the Bank of England cut the base rate to 0.5 per cent in March 2009, the lowest level since it was founded in 1694.

The report, from the housing information firm Hometrack, said: ‘If current trends continue, there will be more outright owners than those with a mortgage by 2014/15.’

Richard Donnell, director of research, said there has been a seismic shift in Britain’s homeowners which will continue, unless the mortgage drought comes to an end.

Huge deposits: Less people are likely to get out mortgages because of higher down payments according to the study

Huge deposits: Less people are likely to get out mortgages because of higher down payments according to the study

He said: ‘Buyers are being stymied by lack of mortgage finance and large deposits so they are struggling to access the housing ladder.

‘But, as households pay off their mortgages, the number of people who now own their home outright has continued to grow.’

 

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At present, around 8.6million homeowners in the UK do not have a mortgage. By 2015, Hometrack predicts it will have jumped to 9.5million.

Meanwhile, the number of homeowners with a loan, currently 9.73million, will have dropped to 9.3million.

Overall, he said homeowners with no mortgage currently own properties worth around £2,000billion, around 40 per cent of the total value of the housing market.

Low interest rates: Older homeowners who benefited from low interest rates in the 1960s and 70s are likely to finish paying off mortgages meaning few and fewer people are still paying for their homes

Low interest rates: Older homeowners who benefited from low interest rates in the 1960s and 70s are likely to finish paying off mortgages meaning few and fewer people are still paying for their homes

Mr Donnell said: ‘This is a trend set to continue, re-enforced by lack of mortgage availability and households taking advantage of low interest rates to re-pay debt.’

Latest figures, from the Council of Mortgage Lenders, show how the number of mortgages being handed out has collapsed from the much higher levels before the credit crunch.

In July, just 49,500 got a loan to buy a home. In July 2007 - the month before the credit crunch struck - the figure was nearly double this level at 96,500.

The fall in first-time buyers has been equally dramatic, plunging from 568,200 in 2001 to just 193,000 a decade later.

Peter Rollings, chief executive of the estate agency Marsh & Parsons, said: ‘Securing an affordable mortgage without a colossal deposit is an Olympian task for the average buyer.

‘As things stand, it is only cash-rich areas like prime London that are able to defy the effects of historically weak mortgage lending.’

The English Housing Survey, published by the Department for Communities and Local Government, shows how the crisis is forcing growing numbers of young people to rent.

The number of households who are privately renting, such as parents with young children, has ballooned to its highest level since the 1970s.

There are 3.6million households who are privately renting from a landlord in 2010/11, the latest available figures, compared to just two million a decade ago.

 

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The elder generation are again moaning. ... Your pensions are lower as you are living longer and you will drain the NHS of all it's resources, your generation has got us in this mess - free uni, jobs for life, final salary pensions, your mortgages were peanuts compared to those nowadays, your houses have increased enormously in value, you have been hit the least with spending cuts, bus passes when you really don't need to travel everyday... - Stevie H, Wiltshire, UK, 22/9/2012 03:13========== You're just hilarious.I should have been able to retire in two years time and receive a pension on which I could live comfortably, having paid a full stamp from the age of 18. I'd have paid the 'married women's stamp' if I'd realised the pitiful amount I'd receive - that money would have been useful to me 35 years ago! Not many of my age ever had a private pension and I remember paying 17% interest on my mortgage back in the late 70s or early 80s. I shall have to work until I'm 70!

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I look with loathing at these greedy thieves, whose low-cost mortgages are subsidised by my lost pension ond savings interes. They're parasites. - Kate Evans, Nottingham, United Kingdom, 22/9/2012 12:25 =================== Thieves!! Some people were just lucky enough to have negotiated a mortgage - before everything collapsed - that benefited them. It could just as easily have gone in the other direction you know. The 'parasites' as you call them have NOTHING to do with your lost pension or interest on savings; they don't determine the interest rates! But let's be fair Kate, you look with loathing on most people.

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Petunia Picklebottom , Manchester, - apologies, it was early in the morning when I wrote that ;-) the point remains despite being aimed in the wrong direction! - Rigsby , Rugby, 23/9/2012 15:22 No worries! Sorry for taking offense! :)

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Petunia Picklebottom , Manchester, - apologies, it was early in the morning when I wrote that ;-) the point remains despite being aimed in the wrong direction!

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The problem with people today is they spend a lot of money that they don't have in order to impress loads of people. They want £25k+ weddings, new cars, to go out all the time, have nice clothes and jewellery and wonder why they are stuck renting. I know people who have financed cars, loads of student debt, and are about to get a 90% mortgage and pay £23k in interest alone in the first 2 years! I don't know how they can sleep at night, I wouldn't be able to!

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Petunia Picklebottom , Manchester, 22/9/2012 23:44 - there's always that good old, now rare tradition of making sure you're financially secure before having kids. Perhaps saving a deposit should have come before having 5? - Rigsby , Rugby, 23/9/2012 07:17 There's always that good old tradition of reading too. I do not have 5 children, the poster of the comment I was replying too does. I am 28, have 2 children, saved my deposit to buy my 3 bedroomed extended semi years ago, and will be mortgage free in less than 20 years before my husband and I are 50! But thanks for the advice! :D

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Petunia Picklebottom , Manchester, 22/9/2012 23:44 - there's always that good old, now rare tradition of making sure you're financially secure before having kids. Perhaps saving a deposit should have come before having 5?

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Will that be because their homes were repossessed?

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Who cares .

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I think most people have missed the boat with mortgages, when 5 years ago, the banks were practically giving them away, with 110% mortgages! So now, to save for a deposit, in most cases it's 40% of the value of the house, it's almost impossible if you're already renting, as most of you take home pay will already be contributed to the rent, food, clothes etc. With the little that is saved, you'll be lucky to save the money for a deposit within 10 years. Anyway, do what I do and get yourself caught, and you will get free accomadation, in a ball...

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