U.K. mortgages up

Press, 25 February 1989, Page 30

U.K. mortgages up

By

Cotten Timberlake,

of

the Associated Press (through NZPA) London Mrs Thatcher’s programme to transform Britain into “a propertyowning democracy” has produced an army of new home owners. But many are being squeezed by her determination to curb inflation by driving up interest rates.

Mortgage costs have risen at their fastest rate for 50 years, to 13.5 per cent from 9.75% last

northern summer, confronting many of Britain’s 15M homeowners with heavy debt and even the risk of losing their homes, home buyers’ advocates say.

Stephanie Manasche, a single mother in Harrow, says her monthly payments have jumped £42 (SNZI2O) to £262 ($750), and she had to negotiate a temporary agreement with her lender to pay interest only. That brought the payment down to £253 ($725), and she is still having trouble

keeping up. The monthly payment on a new £40,000 ($115,000) 25-year adjustable mortgage has risen to £388.42 ($1110) from about £304.93 ($875) last northern summer, the Building Societies Association said.

Repayments on only the first £30,000 of a mortgage are tax-deductible. Most rates fluctuate with interest rates. Fixed rates are rarely offered, and 40 per cent of mortgageholders have their

monthly payment adjusted once a year.

The squeeze worsened last year when young buyers rushed into the market and overcommitted • themselves trying to beat the abolition in August of double tax relief for unmarried joint mortgage-holders. Mrs Thatcher says that inflation, which has jumped to an annual rate of 6.8 per cent from 3.3% a year ago, is her top priority, and interest rates are her weapon.