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Nation of mortgage slaves among Britain's young couples
Last updated at 10:07am on 30.05.07Massive mortgages are turning a generation of young couples into wage slaves, it has been claimed.
A report warned that the spiralling price of housing means Britain is in danger of becoming the "grossly divided" society of have and have-nots not seen since Victorian times.
First-time buyers who manage to make it on to the property ladder and parents with young families are like "bonded labourers" tied to their jobs.
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With housing prices soaring to unprecedented levels, many young couples have been reduced to 'bonded labourers' in a 'modern day slavery', the shocking report has claimed
The bleak report by academics - called On The Treadmill - says "super-size" loans are pushing soaring numbers of parents to desert their children in order to work long hours.
Many are taking on second jobs to pay a mortgage which could be up to seven times' bigger than their salary.
The warning came as figures from the British Bankers' Association showed the average home loan is now a record-breaking £152,800 - compared with £50,000 in 1994.
With a £150,000 mortgage, the monthly repayments are about £1,100, or 75 per cent of the take-home pay of a worker on average earnings.
Many buyers in the South, however, have to borrow more than double this amount, with average asking prices of nearly £400,000 in the capital.
New mortgage levels could be forcing Britons in to a form of 'modern day slavery'
The report, from the universities of Aberdeen and Loughborough, claims many young couples are being turned into "bonded labourers" by their mortgage.
This is someone who works to repay a loan, typically trapped into doing excessively long hours for little money.
Dr John Bone, a sociology lecturer at Aberdeen, said: "They are like bonded labourers because they are so heavily indebted.
"For these young homeowners, the burden of mortgage debt will place great stress on those who have families.
"Both debt-harassed parents are forced to work increasingly long hours to meet the payments.
"Little time will be left for family life and little disposable income with which to enjoy it."
The problem is likely to get worse, with the size of the average mortgage increasing by nearly £12,500 over the past 12 months.
The preliminary findings from the universities' 18-month study of 18-to 40-year-olds says the cost of buying a home will create a "grossly divided society last seen in the 19th and early 20th century".
Those who do buy will be taking on levels of debt which would have been "inconceivable" to previous generations.
Meanwhile, those who cannot afford to buy will feel forced to delay getting married or having children because they want to own before making such an important commitment.
Without their own home, many will have to live with their parents, rent at vast expense or live in "studentstyle" house shares, even in their thirties.
A spokesman for the think-tank, the Relationships Foundation, said: "This report highlights a very difficult situation for many families.
"When taking on these huge mortgages, parents mustn't forget that a good home is more than just a large house. It involves time together as a family.
"There is a wealth of research showing that keeping time for children is essential for their well-being and helps them educationally, socially and emotionally."
One family involved in the study, which will continue for another two years, spoke of the misery involved in renting.
They have moved five times in four years, as their landlords decided to sell up or start charging an extortionate rent. House prices have been increasing for more than a decade to reach a record of nearly £200,000 for the average home.
They are still rising at an inflation-busting 10.9 per cent per year, according to the biggest mortgage lender, the Halifax.
It estimates that buying a home is impossible in 70 per cent of towns for key workers, such as teachers, police, firemen and nurses. Four interest rate rises since last summer have made the situation even worse.
Rates are now at their highest level for six years at 5.5 per cent, with economists warning they could reach six per cent this year.
David Stubbs, senior economist at the Royal Institution of Chartered Surveyors, said: "Stretched affordability among first-time buyers means many cannot contemplate buying a home at the increased rates of interest now been demanded by mortgage providers."
Recent research found rising numbers of under-30s can only afford to buy with the help of their parents.
About 40 per cent who have bought over the past three years had help from their parents, according to the Council of Mortgage Lenders.
Historically, just one in four buyers had help from the so-called "Bank of Mum and Dad".
Reader views (4)
Here's a sample of the latest views published.
That's the reflection of an "inversive value" society... Where almost teens are hot for boozing or being stoned... and still driving, So is that cool?! Well it seems that nobody care about anything.
- Tino Costa, Camberwell London
I was lucky enough to inherit all of my mother's money (but unlucky to lose my mother). This enabled me to pay a very large deposit on a small 1-bed flat in zone 6. Now, if I can just pay another £33.5K, it will be all mine!
- John Evans, London, U.K.
Is anyone else out there sick of hearing all the woes of people being 'forced' into debt to buy £400k houses? Buyers need to look at what they can afford and buy in that area. In Greater London there are plenty of houses under the £400k mark where you can still commute to the capital in 30-40 minutes. We are breeding a greeding nation and are setting ourselves up for the biggest recession in history with this absurd mortgage lending. Receivership and liquidation are at record highs. People can't afford this and all the banks and mortgage lenders are feeding this frenzy by allowing everyone silly enough to borrow what they like. As for interest only this is by far the biggest travesty. It's about time we returned to 3 times your salary and humble beginnings in properties that need work and perhaps aren't in the smartest areas rather than the greed is good culture that we are fostering. Heavily taxing those snapping up the smaller properties which are genuinely preventing those from getting their foothold on the ladder would also be a solution.
- Mortgage Moans, Surrey, UK
Irresponsible lending by the Banks and Building Societies coupled with low interest rates are the main causes of the problem.
- Brian, Bristol
