Alarming number of Welsh adults struggling to pay mortgage

Shelter Cymru and Citizens Advice Cymru revealed that alarming numbers of Welsh adults are struggling to cope  with mortgage or rent payments.

 Jonathan Edwards MP announced the worrying results of the joint research at the National Eisteddfod in Denbigh.

The research, carried out by YouGov, asked how people were coping with rent and mortgage payments, how secure they felt financially compared to last year, how long they would be able to afford to pay their rent or mortgage if they lost their job and whether they had taken out one or more payday loans in the last year.

Shockingly, nearly half (48%) of Welsh adults who paid rent or a mortgage said they struggle or fall behind at least some of the time to keep up with their payments, with 12 per cent saying that they struggle constantly.

For those who are currently in employment, when asked about how they would manage if they lost their job, one in six mortgage or rent payers in Wales would not be able to keep up with payments because they do not have a financial safety net, such as insurance, or savings.

John Puzey, Director of Shelter Cymru, said: “These figures paint a very worrying picture. It’s clear that many people are only just holding things together financially – just one piece of bad luck such as losing their job or being unable to work could be enough to tip them over the edge into serious difficulties.

“It’s bad enough that nearly half the people surveyed who paid rent or a mortgage said that they were struggling at least some of the time, but we also need to consider that many people are on interest-only mortgages and that interest levels are still relatively low. If this changes or people’s mortgage deals come to an end, then this situation could escalate significantly.”

Mr Puzey pointed to the widespread benefit changes as a likely reason why tenants in council and social housing are particularly affected - 11 per cent of council and housing association tenants said that they had taken out more than one payday loan in the last year to help meet living expenses, compared to two per cent of the population overall.

“It seems fair to assume that the higher level of financial difficulties and insecurity reported by council and social housing tenants are a direct result of the sweeping changes to benefits, in particular cuts to housing benefit and the introduction of the bedroom tax,” he said.

Fran Targett, Director Citizens Advice Cymru said: “The number of people turning to payday lenders to meet everyday living expenses is thankfully relatively low, but we are concerned that this is just a small part of the picture.

“Our bureaux in Wales have seen a 555 per cent increase in issues linked to payday loans in the first quarter of 2013 compared with the same quarter of the previous year, and this is something that is very worrying as it will only increase with the changes to the benefit system.

“Together with the dramatic increase in the use of foodbanks as reported recently by the Trussell Trust, this gives a very clear impression of a lot of people who are running out of options to keep their heads above water.”

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Fall in Welsh house prices

Welsh house price sink £2,935 in the past year

·         Prices fall a further £1,552 from April

·         May’s monthly fall the biggest since January 2012

House Price	Index	Monthly Change %	Annual Change %
£150,376	233.3	-1.0	-1.9

Richard Sexton, director of e.surv, part of LSL Property Services, comments: “The Welsh housing market is still caught in the clutches of restricted mortgage availability. Prices have fallen by almost £3,000 over the past 12 months, and £1,552 in the last two months. It’s a sharp contrast with England and particularly London, which is starting to fire at all cylinders. Buyers in Wales are struggling to get mortgage finances, which is clogging the whole property chain.

“But things are looking up. The lending environment is slowly improving for first time buyers, who are able to access wider and cheaper a range of mortgage deals. Low interest rates are helping and more affordable options are surfacing that are helping boost activity from the bottom end of the market. But deposit requirements remain the sticking point with plenty of buyers unable to cobble together enough savings while inflation remains high and wages remain suppressed. Wealthier buyers and equity-rich retirees represent the largest slice of buying power: this is sustaining sales-levels, and propping up prices.

“On a regional level prices tend to vary prominently depending on the distribution of wealthier buyers. Prices have fallen in poorer ends of the spectrum in areas with more first time buyers. The sinking prices are bucking the normal summer trend of sales rising over the summer and sales figures are below average historically, by almost half what they were in 2006.

“But given how difficult it is to get a mortgage at the moment, the small rise in house sales is a cause for celebration. Sales have increased by 6.2% compared to May 2012, reflecting the improvement in first-time buyers flocking to the market, many of who have been supported by improved lending conditions.

 “The property market could do with a spark to boost its rate of recovery. The good news is that the Welsh Government plans to up its game, having recently announced the drafting of a new Housing Bill which will focus on the quality and supply of housing, as well as homelessness and the private rented sector. This bodes well for the future, while the long-term effects of the Funding for Lending scheme and Help to Buy feed through into the market. Hopefully this combination will drive the Welsh property market into safe territory as the year progresses.”

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