Mortgage Madness

The de-regulation of banks and building societies in the 1980s provided an environment in which lenders could provide larger mortgages to more people. The amount of deposit people needed to find to put down on a house decreased, and so people were able to take on more debt. The multipliers – how many times the income could be borrowed – began to increase, and now it is possible for people to borrow up to five times their salary, sometimes even more.

During the 80s and 90s irresponsible lending flourished, and the now largely discredited endowment mortgages became common place. It is generally recognised that many endowment mortgages were mis-sold, with clients being told of the money they would make over and above paying off the mortgage. Money that could pay for a new car or a dream holiday. It wasn’t long before it became apparent that many of these policies were under performing and would fall well short of paying off the mortgage let alone providing additional income to the borrower.

The problems caused by taking on too much debt include an inability to meet repayments when interest rates increase, problems with negative equity, and ultimately increasing numbers of repossessions. The misery of mortgage madness.