Homeowners stuck between decreasing earnings and increasing mortgages

20/07/2007

Real finance group, Alliance Trust’s showed a small increase towards the second quarter, due to strong growth in the economy, homeowners however are spending too much daily and mortgage repayments are becoming difficult to keep up with.

During the end of 2006, the Financial Reality Index raised higher during the second quarter to 82.0, on the first three months of 2007 it was up by 8.3 points.

Head of Alliance Trust Research Centre, Shona Dobbie commented, “Although we see a slight improvement in financial wellbeing this is mainly down to underlying economic background conditions. Homes are still being squeezed by lower real earnings growth at the same time as they face higher mortgage payments and council taxes.”

Dobbie added, “There is still no sign, however, that this reality has sunk in with consumer spending rising at around 3% in the last quarter. The main reason why we think spending will falter is the pressure from mortgage payments and other outgoings that are not being matched by similar increases in real wages.”

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