London bankers with giant mortgages consider renting rooms

efinancialcareers.com:

As British interest rates rise, British mortgage payers are hurting. The Bank of England's July financial stability report says that over a million households in the UK are faced with the prospect of their mortgages increasing by £500 a month. However, around 400,000 UK households are on track for an increase of over £1k a month in their mortgage repayments. And plenty of people in that category work in finance. 

«Lots of senior bankers live beyond their means,» says one former director at Credit Suisse. «A managing director who just got fired and has a £5m-£10m house could be facing mortgage costs going from £5k to £25k a month. I know plenty of MDs who have £3k mortgages, and that's at 1.5%.»

Mortgage brokers confirm the pain. Aaron Strutt at Trinity Financial, a mortgage broker with offices in London's Mayfair and Islington, says that until a few years ago banks were offering the most alluring rates to people taking out mortgages of between £2m and £10m. «They were 1.5% or so, and now they're going up to 6% on two year deals,» he says. 

It doesn't help that mortgage lenders that specialize in working with London bankers, often offered «bullet repayment» arrangements, allowing borrowers to take out higher loan to value mortgages on the understanding that they'd pay down the amounts with future bonuses. Unfortunately, bonuses weren't great last year. And they will probably bebad this year too. 

Even when bankers aren't making official «bullet repayments,» it's common for people in banking to take out interest rate only mortgages with a view to paying down the capital sum with bonuses. «A lot of people in banking are on interest rate only mortgages and don't often pay mortgages down,» says one MD who recently left a US