Morning:
8°c
Millions benefit from falling mortgage bills
Nicholas Cecil9 Mar 2009
Millions of families are seeing the cost of living fall as mortgage bills drop, a new study reveals.
Nearly one in three households, or eight million, is now experiencing deflation.
Most homeowners with mortgages, couples with children, households with adults aged 30 to 39 and the richest 20 per cent in the country are benefiting from a lower cost of living.
However, millions of other households, particularly the elderly, are struggling to make ends meet as they are hit with annual inflation of up to seven per cent.
The number of households affected by deflation has soared from two per cent in the year to September to 32 per cent in January, according to the Institute for Fiscal Studies.
Most households are expected to be experiencing deflation later this year for the first time since the Sixties.
However, the IFS report today revealed stark differences among social groups.
The biggest drop in the cost of living - of 3.6 per cent on average - is among the richest fifth of people aged under 35 as interest rates have dropped sharply.
Zoe Oldfield, of the IFS, said: "One of the concerns with deflation is it encourages people to put off purchases because they think prices will fall further.
"But this deflation is largely driven by falls in mortgage interest payments."
The IFS stressed that a quarter of households still faced inflation of more than six per cent, largely because the price of food and domestic energy is far higher than a year ago.
Reader views (3)
I have seen my mortgage interest repayments decrease substantially, however any savings are going straight back to the bank in increased and one-off capital repayments, as investments I had hope to use to pay off part of the mortgage have gone through the floor.
I'm just an average middle-aged(ish) bloke with some bog-standard endowments and pension policies and I reckon they've devalued around 30-40k, possibly more in the last year!!!
- Mark, South-East London, 10/03/2009 09:45
Report abuse
Hugh,
Get over it. For years you have had it so good on your unearned income. Now you know what it feels to be like a borrower.
- Paul B, London, 09/03/2009 21:34
Report abuse
I do not have a mortgage, but I am suffering as a result of the drops in interest rates.
the Savers outnumber the borrowers by six to one. Why should the majority suffer as a result of the profligacy of a substantial minority? Plenty of government talk about helpfully lenders/borrowers, but what about the savers? Those making the decisions beware, your time is coming.
- Hugh, Middx, 09/03/2009 16:01
Report abuse
