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This edition of the Money Programme was originally broadcast on BBC Two 30 May 2008.
Max Flint (Presenter)
Tonight on the Money Programme; are you one of the millions of people affected by the biggest mortgage shake up in a generation?
Hillary Le Roux
We’re very, very nervous about losing the house, I mean it’s the house of our dreams and it would be heart wrenching.
Max (commentary)
The credit crunch has led to banks withdrawing thousands of mortgage deals leaving an increasing number of us high and dry.
Polly Sharma
Trying to manage that on my own, you know, I’m really feeling the pinch now. I’m not sort of being dealt with appropriately because I work full time, earn at a good salary so I don’t know what more I can actually do.
Max (commentary)
Our own survey suggests that many of us believe we can’t afford the average rate rise. We ask just whose fault it is.
Jeremy Leaf (Royal institution of Chartered Surveyors)
No question that mortgages just got too easy and a hundred and 25 per cent, seven, eight times salary, just ridiculous really, unsustainable in the longer term and it was inevitable that something was going to happen.
Max (commentary)
And what’s in store for us as first time buyers need bigger and bigger deposits just to get on the property ladder.
Doug Maslowski
Well asking your mum and dad for a lot, for £12,000 wasn’t the easiest thing to do.
Max (commentary)
We investigate the current state of the market and ask what’s happened to your mortgage.
This is a story of how right across the UK millions of people are now searching for affordable mortgage deals after being caught up in the global financial crisis affecting all of our lives.
Among them the woman whose struggling to stay in her home. The man desperate to find a house for his family and the mum facing a huge hike in her monthly payments.
Hillary Le Roux
Hi.
Max
Hi Hillary, I’m Max Flint.
Hillary Le Roux
Hi. Nice to meet you.
Max
Nice to meet you as well.
Hillary Le Roux
Come through.
Max
Hillary Le Roux lives in this three bedroom house near Wellingborough with her husband and two young children.
Hillary Le Roux
...really nice and big and spacious for us.
Max
Plenty of room for pictures of the kids.
Hillary Le Roux
Absolutely.
Max (commentary)
Like millions of others her cheap fixed rate deal is coming to an end and she wants to stay in her house.
Hillary Le Roux
It’s the house of our dreams and we’ve waited a long time for this house so we would be sad if we had to lose it so we’re going to try everything possible not to lose it
Max (commentary)
Last year Northern Rock leant them £170,000 to buy their home. In two weeks her cheap deal comes to an end.
Hillary Le Roux
We were given another 100 per cent mortgage with all your costs paid, just your upfront fees you have to pay and obviously that added up with your salaries and all of that and we got the mortgage.
Max (commentary)
When Hillary borrowed a hundred and 25 per cent of the value of her house her monthly repayments of £940 were easily within her budget.
Hillary Le Roux
When we bought the house, you know, everything was at a peak; the houses that were on the market were getting sold quickly, house prices were, were increasing and a couple of months down the line we never thought that there would be a problem with mortgage companies.
Max (commentary)
Northern Rock wasn’t the only one offering low rate deals. Two years ago if I’d visited any high street lender they would have been falling over themselves to offer cheap fixed rate deals and a 100 per cent mortgages; buying a home had never been easier.
Merryn Somerset Webb (Editor, MoneyWeek)
There was an unprecedented level of money available to the average punter. The idea that you could borrow five and a half times, six times your earnings, that you could buy a house with no deposit whatsoever, not only that but you could buy a house with no deposit and then, then they’d give you another 10 or 20 per cent of the value of the house to go out and buy furniture or the holiday of a lifetime, you know, this is unprecedented access to easy money.
Max
At the time were you worried about that because obviously you have no deposit in there, you have no equity?
Hillary Le Roux
No. We weren’t worried because when we bought our house, first house four years ago or five years ago, house prices were still going up and up and up and up and up so we didn’t have a problem with that and we, we probably made about 30 grand.
Max (commentary)
But not everyone thought the cheap deals were sensible.
Merryn Somerset Webb
The products that Northern Rock were offering to the market, even last year, were, were verging on moronic, you know, and it, I think it’s been obvious to everyone for quite a long time that house prices simply couldn’t keep going up at the rate that they were going up, they’ve tripled in the last decade, it’s an enormous rise and to lend someone a 125 per cent of the value of a house is to suggest they’re going to go up another 25 per cent over the next couple of years which is clearly not the case and I think even last year was obviously clearly not the case. So it was, yeah, it was grossly irresponsible lending.
Max (commentary)
Now with only two weeks left before her deal runs out Hillary is worried.
Hillary’s son
I want two!
Hillary Le Roux
You can get two after you’ve eaten that.
Max
Are you nervous about losing the place?
Hillary Le Roux
We are. We’re very, very nervous about losing the house, I mean it’s the house of our dreams and we are working hard and we have worked hard to get to where we are and just to have it all taken away from us, we, it would be heart wrenching.
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Content last updated: 16/05/2008
