Interest-Rate Pain: Expiring fixed-rate mortgages cause difficulties, potentially forcing home sales. More Americans are getting auto loans that exceed the worth of their cars

by BoatSurfer600

Borrowers with expiring fixed-rate or tracker mortgages face difficulties, with some saying they will be forced to sell their homes

via theguardian

For Steven, a media consultant from Guildford, and his wife, the remortgaging nightmare is only beginning. “People like me can’t sleep at night – it’s horrendous,” he says. “The mortgage for our three-bed cottage is up for renewal in December. We’ve geared our lives around the low interest rates of the past 13 years. I am the only earner in the family. If interest rates hit 6%, I’ll have to find an extra £1,480 per month – well over double what we pay now. That is totally catastrophic for our family, absolutely terrifying.”

The UK is experiencing the sharpest, fastest rise in interest rates since the 1980s, and markets and homeowners are having to digest yet another increase from the Bank of England, which raised rates by another 0.5 percentage points to 5% on Thursday to a 15-year high.

Financial markets are expecting the Bank of England will raise interest rates again at its next meeting in early August.

After more than a decade of rates at 0.75% or below, this has left many homeowners whose fixed deals are ending, and those on tracker mortgages, facing huge blows to their finances.

More Americans are getting auto loans that exceed the worth of their cars

More Americans are entering into auto loans that exceed the worth of their cars after vehicle values declined in the wake of dramatic increases during the pandemic, a report has found.

Used car loan-to-value ratios increased to 125 in the first three months of this year from 104 for the same period in 2021, according to the study released Tuesday by credit reporting firm TransUnion and market researcher J.D. Power. A ratio of 125 means that the borrower’s loan is worth 125 percent of the vehicle’s value.

The loan-to-value ratios, or LTVs, could be foreshadowing higher delinquencies ahead, the study found. Negative equity, or the amount that debt exceeds a vehicle’s value, has ballooned in recent years, with some consumers stepping into car dealerships $10,000 underwater.