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Lead

ONE MILLION MAY FACE LOSING HOMES

by Daphne Liddle

THE GATHERING credit crisis could lead to more than one million mortgage payers losing their homes over the next 18 months according to the City regulator, the Financial Services Authority (FSA).

Already the number of repossessed homes up for auction is rising fast, according to leading auctioneer Allsop, who say that now nearly 40 per cent of houses up for auction have been repossessed compared to 20 per cent a year ago.

Gary Murphy, a partner at Allsop, said: “The number of repossessions we deal with leapt after last summer. Between 45 per cent and 50 per cent of properties in our last three sales were repossessions.”

The average sale price of properties auctioned by Allsop at the last auction in December was £200,000.

combination

Now the FSA says that a combination of huge mortgages, credit card, personal loans and other debts, along with a steeply rising cost of living is likely to put many home-buyers into serious financial difficulties.

The FSA has listed three major risk factors, endangering mortgage payers:

•    having a loan with a repayment period of over 25 years;
•    having a mortgage worth more than 90 per cent of the home;
•    having borrowed 3.5 times or more than one’s income.

More than a third of all mortgages sold between April 2005 and September 2007 had one or more of these risk factors.

But figures show that 1.04 million homebuyers fell into two of more risk categories – making them “most likely” to be unable to keep up mortgage payments. This group includes both first time buyers and those who remortgaged from one deal to another.

Opportunities to switch mortgages now from one lender to another in search of better terms are drying up and the credit crunch bites. And banks and finance companies will be wary of homebuyers who are seen as being too high a risk.

The FSA says that even small rises in household bills or repayments will tip many families over the edge into being unable to meet their mortgage commitments.

Some 150,000 buyers fall into all three risk categories and are the most likely to have their homes repossessed.

If this happens, it will double the previous 1991 record of 75,540 repossessions in one year.

Home repossessions have risen from 3,700 between January and June 2004 to 14,000 in the same period in 2007.

Mark Sands, director of personal insolvency at the accountants KPMG, said: “It is a ‘drip by drip’ problem.

“An extra £5 on their mortgage, £10 on their council tax bill and so on is really putting the squeeze on people who are financially overstretched already.”

awareness

An FSA spokesperson said: “We are not saying this scenario will definitely happen but we want to raise awareness of the risks.

“With continuing uncertainty over the economy, it is more important than ever for people to take care of their finances.”

The rise in repossessions with more of these houses coming up for auction, along with the drying up of easy credit, is already leading to a fall in house prices. The Land Registry reported that house prices fell by 0.4 per cent in December.

The average price of a UK home is now £184,469.

House prices have for long been over-inflated and are way beyond the buying power of most working class young people. That has not stopped the banks and finance companies trying to exploit them through life-long mortgage packages with low initial rates to hook them.

Now a million ore more face losing their homes in Britain’s equivalent of the American sub-prime crash.

semi-privatised

Housing associations – a semi-privatised form of “social” or “affordable” housing are also falling into serious financial problems.

Britain already has a shocking housing shortage.

The only sensible answer is for local council to be enabled and ordered to build hundreds of thousands of council houses to be let at really affordable rents, and to enable families facing eviction for mortgage defaults to approach their local authority to buy out the house and then rent it to them as secure tenants.

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Editorials

Holocaust Memorial Day

LAST SUNDAY was commemorated around the globe as international Holocaust Memorial Day, when we remember primarily the victims of the Nazi regime: Jews, communists, socialists, trade unionists, gays, Romanies, the physically and mentally handicapped and many others. The purpose is not to keep alive the hatred of the war years or to feel smug about our “superiority” to the people of the Axis countries but to remember that societies that thought themselves civilised and humane could so quickly become so inhuman.

In no way can we feel superior when we remember the role of British imperialism in the trans-Atlantic slave trade, the Irish famine of the 1840s or the massacre of Amritsar, of those carried out by Cecil Rhodes in Africa and many other atrocities. American imperialism is guilty of the attempted genocide of its own native peoples, of massacres in Korea, Vietnam and many other places. Having said that, the death camps of the Nazis are particularly shocking in their application of modern industrial methods to pure murder.

These horrors are the product of ruling class greed and arrogance and as long as the class divided society exists they can and will happen again. And they have happened again: in the Congo, in Rwanda and currently in Gaza.

It is ironic that General Suharto, one of the worst, died last Sunday on Holocaust Memorial Day. This man led a western-backed military coup in Indonesia against the popular left-wing government of Sukarno. Suharto murdered at least one million Indonesian communists at the behest of western imperialism because they had a “domino theory” of communism spreading throughout south-east Asia. Now those same powers have “game theory” and are claiming that it is necessary to use nuclear weapons in pre-emptive strikes against other countries, just in case they might be going to develop nuclear weapons themselves.

They talk about extremist fundamental Muslims being dangerous. We know that these irrational extremist fundamental free market capitalists are the real danger to the planet. We should not forget that even the “mild” and “liberal” Bill Clinton described Suharto as “our guy” – a man who murdered the children of communists and socialists in case they grew up to avenge their parents.

Suharto then went on to lay his country open to the maximum exploitation by the free market capitalists – laying waste the tropical rainforests to loot the valuable timber and replace them with palm oil plantations. A few years ago the skies over Indonesia were blackened for months on end by fires raging out of control, which had been lit to clear the jungles. Large numbers of rare animals and plants have been rendered extinct and others threatened. And about two years ago unregulated speculative drilling opened up an underground fountain of foul-smelling toxic sludge that has since flowed out under pressure from below to engulf vast acres of land and several villages. What was once a jungle paradise has been turned into a living hell for the people of Indonesia – by extreme capitalist greed.

The only safe place for these extremist fundamentalist capitalists is on trial in international courts and then confinement in very secure prisons or mental hospitals. Future generations will wonder why the workers of this planet allowed ourselves to be ruled by such dangerous maniacs for so long.

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Keep political parties independent

RETURNING to our own lunatic asylum in Whitehall, which is once again rocked by evermore new evidence of sleaze in high places; the resignation of Hain has revived calls for political parties to be funded by the Government to eliminate the danger of corrupt donations.

This is an indirect attack on the influence of the trade unions on the Labour leadership. Parties funded by the Government would effectively be controlled by the Government. The party leaders would no longer be accountable to their own memberships and ordinary citizens would lose what little democratic influence they have on political affairs. The parties would simply become a part of the state, controlled by the ruling class for the purpose of controlling the working class.

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