Mr & Mrs Average In Ni

[Shotoflight]

What about a cheap holiday for Mr & Mrs Average & the sprogs?

http://www.telegraph.co.uk/travel/travel-advice/9162291/Holiday-money-saving-guide-How-to-escape-extra-charges.html

As Dick Turpin would no doubt have acknowledged, travellers have long been an easy source of revenue. Three centuries since he was demanding that they “stand and deliver”, they still are.

When you are in unfamiliar territory, unsure of how much things should cost and dealing with a foreign currency, you will always be at risk of being fleeced.

In the 21st century, though, highway robbery of travellers has reached a peak of sophistication. At almost every stage of a journey, from the initial booking inquiry to the moment you collapse on your hotel bed, you are at risk of being fleeced.

[Shotoflight]

On affordability and mortgage limits

http://www.bbc.co.uk/news/business-17491093

Strikingly the Bank of England also sees the case for having an additional power to impose ceilings on the amount any lender can provide as a mortgage relative to the earnings of the borrower or the value of the relevant property. It thinks that as and when there's a dangerous house market boom, it should probably be able to prohibit 100% mortgages or homeloans greater than two or three times an individual's annual salary.

However it doesn't feel that the general public (you and me) is quite yet ready for such interventionism by an unelected body like the Bank of England. So it wants to see a proper debate before it acquires the power to restrict what kind of loans we can take out when buying a house.

The Bank of England is worried that its reputation would not be enhanced if it was seen as the killjoy restricting every British person's fundamental freedom to borrow more than he or she can afford.

[Shotoflight]

£100 to fill a Ford Mondeo and worse to come.

A fecking £100.

Seriously, would that not make you think regarding taking on a mortgage (or commuting to work) - never mind car insurance, maintenance, road tax and the inevitible rise in interest rates?

And if banks now lend on 'affordability' criteria - £100 to fill the motor is bound to be a fly in the ointment (alongside pay freezes etc.)

Pain for motorists as filling car with petrol touches £100

The cost of filling a large family car with petrol rose to almost £100 yesterday, as forecourt prices reached record heights.

http://www.telegraph.co.uk/motoring/9164101/Pain-for-motorists-as-filling-car-with-petrol-touches-100.html

Edited March 23, 2012 by Shotoflight

[Shotoflight]

As Jim Fitz stated on Radio Ulster, high oil prices are a sign (partly) of global demand and 'growth' however transient - US & BRIC - as will be the higher interest rates that accompany said growth and ending of QE. And inevitibly, sooner or later it will happen to the detriment of zombie businesses and households. The bluffers bluff will be called.

Now the thing is UK growth might take off in london and the south east via finance, exports or whatever - and higher interest rates and oil may, in fact will, be subsumed easier there than NI.

So the regional argument works both ways - like Ireland or Greece on the fringe of eurozone, centrally imposed monetary policy can be catastrophic especially when mixed with pygmy gombeen self interested politicians. As NI will inevitibly lag behind the UK engine (for all sorts of reasons including structural - ROI neighbours, dependency on oil, higher cost of living etc etc etc) what are the likely consequences? It doesn't take a rocket scientist.

The big question is "what will 'growth' look like in NI"?

Best case scenario - A few more part time low paid private sector jobs due to rebalancing and public sector cuts. More transient call centres and bigger publicly funded grants (in old money) for increasingly desperate and risky FDI. A smaller worse paid 'regional' public sector. Farmers still doing OK but reaching capacity and rising input costs - nitrates, fuel, foodstuffs, supermarket squeeze on price. ROI and Eurozone still a drag.

A fleeting tourism spin off (subtracting all the public money spent on it and those that would have visited in any event - without the golf or sinking ship).

I read somewhere that we (UK) are only a quarter of the way through the cuts ie 75% more are coming down the track and in UK terms the budget anticipated a further £10 billion of welfare cuts on top of those already stated alongside another 30,000 UK public sector jobs.

Pre- loading is the new catch phrase for govt - going forward. This one is adept at Pre-loading cuts - pensions (retirement age, tax bands), child tax credits (in 2 weeks), child benefit (in 9 months), 4p litre petrol (in 4 months), regional pay and pay freezes, Housing Benefit, bringing more into the 40p rate.

So given the recent extremes in house prices and all other things being equal (ceteris paribus) and depending on your criteria and reference point, some might think, and tell you, that the average house is affordable for Mr & Mrs Average.

But all other things are not equal.

The world is getting smaller and spinning faster - there is nowhere to hide. Emergency monetary provisions are in place including some, like QE, where the Govt don't even know what effect it will have. Govt's are nervous and looking into the unknown. Wars are being fought and others lined up. Europe is broke, fracturing and going into recession. UK could still double dip. Banks need more capital.

Does any of the above "big stuff" matter?

Totally.

Are we at the bottom?

Hardly.

Edited March 24, 2012 by Shotoflight

[Shotoflight]

Stolen from Khards on the front page and USA based.

It encapsulates what this thread is about but in a more eloquent, coherent and explanatory fashion.

Well worth 2 minutes of your time.

How Housing Affordability Can Falter Even as House Prices Decline

The assumption that lower home prices improves the affordability of houses ignores two critical inputs: interest rates and income.

http://www.zerohedge.com/news/guest-post-how-housing-affordability-can-falter-even-house-prices-decline

Hubris-soaked central Planners are incapable of understanding that their numerous policy interventions have essentially zero impact on the curve. But if you can't believe systems don't respond to frantic policy measures, then consider these factors:

1. Tens of millions of households are too poor to buy a home (the FDIC calculated 40% of the U.S. households have insufficient income and credit to buy a home) without massive subsidies, and with no skin in the game their purchase is basically a lease with an option to sell later for a private gain at the expense of the government.

if it doesn't work out then it's last one on, first one off: they default with little loss and possibly much to gain, i.e. two years living rent-free in a not-yet foreclosed house.

2. Tens of millions of other households are drowning in underwater mortgages they can afford to pay (barely) but that have crippled their net worth and borrowing power. They are out of the housing market except as potential defaulters.

3. Millions of other credit-worthy buyers have woken up to the fact that buying a house is a form of consumption and a risky "forced savings" investment, as property taxes spiral ever higher and prices continue sagging in many markets. The risk is high and the potential gain is uncertain.

Those snapping up housing for cash are either buying to rent the homes or to speculate that a resurgent housing market will arise and they can "flip" for big profits. This segment simply isn't large enough to soak up all the millions of homes languishing in the "shadow inventory" of homes being held off the market in the vain hope prices will bubble higher.

The general idea of lower home prices is that once prices fall to some magic threshold, buyers will jump in and liquidate the inventory. That notion makes two enormous assumptions:

Interest rates will stay near-zero when inflation is factored in

Household income will stop declining.

In other words, there are three inputs to housing affordability, and price is only one of them. Interest rates and disposable income are equally important. Note that income in all quintiles (the entire spectrum of income--high, middle and low) has been declining since the housing bubble topped in 2007:

Official inflation has been running at around 3% a year, and many other measures suggest that number grossly understates reality by gaming the percentages of various inputs.

But taking the official 3% as a reasonable approximation, then buyers of 4% 30-year mortgages are earning a wafer-thin 1% in real return (4% - 3% = 1%) and they are taking a stupendous risk that inflation will remain well under 4% for the next three decades. Any surge in inflation and rates would destroy much of the value of their investment.

Let's take two examples. Let's say a house that sold for $400,000 at the top of the bubble is now selling for $250,000, $50,000 down (20%) with a $200,000 mortgage at 4%. let's say the household earns $50,000, so the mortgage is exactly four times gross income. The interest on the mortgage is $8,000 annually (principal, property taxes, insurance etc. are added to make up the total mortgage payment).

Now let's say the house declines in price to $225,000, so the down payment drops to $45,000 and the mortgage is $180,000. But let's say investors are now demanding 3% above nominal inflation and mortgage rates are now at the historically moderate level of 6%. Meanwhile, the household income has slipped to $45,000 annually as bonuses and hours are trimmed and workers transition to lower paid positions.

The ratio of income to mortgage is still 4-to-1, but the annual interest payment is now $10,800, $2,800 higher--a 35% increase. By any measure, the house is less affordable despite declining $25,000 in price.

This is how affordability can decline even as home prices continue to slide.

[kerzo]

£100 to fill a Ford Mondeo and worse to come.

A fecking £100.

Seriously, would that not make you think regarding taking on a mortgage (or commuting to work) - never mind car insurance, maintenance, road tax and the inevitible rise in interest rates?

And if banks now lend on 'affordability' criteria - £100 to fill the motor is bound to be a fly in the ointment (alongside pay freezes etc.)

Pain for motorists as filling car with petrol touches £100

The cost of filling a large family car with petrol rose to almost £100 yesterday, as forecourt prices reached record heights.

http://www.telegraph.co.uk/motoring/9164101/Pain-for-motorists-as-filling-car-with-petrol-touches-100.html

I have a diesel Mondeo myself and I am putting about £70 a week through it for the bare bones commuting during the week (about 142.9ppl). Luckily my fiancée works not too far from me so essentially the costs are split but even still, the total cost of fuel isn't far behind the mortgage payment at the end of the month.

[tinbin]

The assumption that lower home prices improves the affordability of houses ignores two critical inputs: interest rates and income.

This should be a headline. This is the simple truth of 'where we are at'.

Interest rates are rock bottom ... Incomes are squeezed and living standards are in decline ... this is not going to be something that just gets brushed under the carpet.

Common sense will prevail!!

[2buyornot2buy]

This should be a headline. This is the simple truth of 'where we are at'.

Interest rates are rock bottom ... Incomes are squeezed and living standards are in decline ... this is not going to be something that just gets brushed under the carpet.

Common sense will prevail!!

Do you think it will TinBin? I'm not seeing it in my work.

[tinbin]

Do you think it will TinBin? I'm not seeing it in my work.

I think it is inevitable. The Government might be able to print more money when they need to but the rest of us can't.

There is only far that ppl can survive on credit. Sooner or later living habits/expectations will have to change to accomodate. That wont happen overnight but it will at some point.

We are already seeing evidence of it with no shortage of material for the Mr & Mrs Average thread.

I know we did this right at the beginning of this thread but its black and white for me.

Realisitically, how many ppl can afford the following monthly... (and this is only a guide)

£660 MTG repayments (£125k over 25 years @ 4%)

£ 75 Rates

£ 60 Electric

£100 Oil/Gas

£ 30 Home Insurance

£ 40 Life/Critical illness insurance

£ 10 Maintenance Payment (to cut the grass in a new development!!)

£300 Shopping Bill

£100 Car Loan

£ 50 Hire Purchase (Fridge Freezers, Sofa etc)

£ 25 Mobile Phone

£ 60 Sky TV/Internet costs

£ 12 TV Licence

£700 Child care costs (1 child)

£ 50 Clothing

£ 50 Credit card(s)

£200 Petrol costs

£100 Car Insurance/Road Tax

£ 40 Takeaways/Off licence

£100 Holidays

Total = £2762

There will always be those who dispute these type of outgoings but I would say that they are fairly normal and prob on the low side for some. Even if you chalk the kid off and you are still around the £2k mark per month.

A 2% interest rise takes the MTG repayment it to £805 per month (approx). Wow ... how happy would you be paying that sort of money for a shoebox townhouse. Dream home... or nightmare?

I suggest everyone takes cover because the bubble hasn't burst just yet ... and when it does properly its gonna be messy!

Edited March 26, 2012 by tinbin

[2buyornot2buy]

The sooner interest rates move towards the long term average the better for all of us. Zombie households are helping no one.

[vman7]

tinbin i would say you are more or less spot on with the figures except car loan as there are people out there who spend £350 and above a month PER car. a friend of mine is paying nearly £600 a month for his motor!

So lets say 2 teachers who bring in £1500 each only have about 200 to spare each month. how is this relistic? how is this sustainable?

the life of living on a beach in thailand and scrapping enough to eat is sounding better by the day, hassle free and no need for a car!

[tinbin]

The sooner interest rates move towards the long term average the better for all of us. Zombie households are helping no one.

We are already starting to see that happen with the recent increases to the SVR rates.

BOE base rate is 0.5%. Banks are paying over and above this to savers. They would argue that to do this it is costing them money. Therefore they are starting to increase their lending rates - including MTG's.

Theres a bit more to it than that ... and I am certainly not an expert but a low BOE base rate doesnt look like anything other than a short term fix. Long term I think the low BOE base rate will be viewed as nothing more than a sticking plaster that didnt heal the cut

[2buyornot2buy]

tinbin i would say you are more or less spot on with the figures except car loan as there are people out there who spend £350 and above a month PER car. a friend of mine is paying nearly £600 a month for his motor!

So lets say 2 teachers who bring in £1500 each only have about 200 to spare each month. how is this relistic? how is this sustainable?

the life of living on a beach in thailand and scrapping enough to eat is sounding better by the day, hassle free and no need for a car!

£600 a month? What the hell is he/she driving?

Why would anyone do this....

[tinbin]

tinbin i would say you are more or less spot on with the figures except car loan as there are people out there who spend £350 and above a month PER car. a friend of mine is paying nearly £600 a month for his motor!

So lets say 2 teachers who bring in £1500 each only have about 200 to spare each month. how is this relistic? how is this sustainable?

the life of living on a beach in thailand and scrapping enough to eat is sounding better by the day, hassle free and no need for a car!

We are so far up our own asses in the west its unreal!! ... In China they cycle everywhere. They even have electric assisted bikes that help to go up hills. They earn far less but save more than us. They make their riches by exporting us our material goods that make our lives supposedly so much better. I guess thats what they call living the dream ... middle aged, fat, ramming doughnuts into our mouths whilst driving our Beemers.

[Shotoflight]

tinbin i would say you are more or less spot on with the figures except car loan as there are people out there who spend £350 and above a month PER car. a friend of mine is paying nearly £600 a month for his motor!

So lets say 2 teachers who bring in £1500 each only have about 200 to spare each month. how is this relistic? how is this sustainable?

the life of living on a beach in thailand and scrapping enough to eat is sounding better by the day, hassle free and no need for a car!

Regional pay and increased pension contributions should take care of that last £200 for the teachers.

I hope they don't smoke

[2buyornot2buy]

I wonder what the really average wage is for say 25-40 year olds here in NI.

[Shotoflight]

I wonder what the really average wage is for say 25-40 year olds here in NI.

Topped up by mum and dad?

Parents facing financial squeeze

http://www.bbc.co.uk/news/business-17257468

People aged in their late 30s or who have children aged under 16 are facing the greatest squeeze on their finances, a report on UK savings has suggested.

Divorcees have also found themselves unable or unwilling to save, according to the report by Scottish Widows.

Meanwhile, the so-called "Bank of Mum and Dad" has continued to do brisk business in tough economic times.

The report claimed that families were giving or loaning nearly £13,000 to children and grandchildren on average.

The continued cash outflow - used for living expenses, paying off debts or buying a house - was "generally unexpected and can be a drain on finances at a time the parent can least afford it", the report said.

Rising living costs and the risk of unemployment have put family finances under pressure.

[Son of Taeper]

What about a cheap holiday for Mr & Mrs Average & the sprogs?

http://www.telegraph.co.uk/travel/travel-advice/9162291/Holiday-money-saving-guide-How-to-escape-extra-charges.html

As Dick Turpin would no doubt have acknowledged, travellers have long been an easy source of revenue. Three centuries since he was demanding that they “stand and deliver”, they still are.

When you are in unfamiliar territory, unsure of how much things should cost and dealing with a foreign currency, you will always be at risk of being fleeced.

In the 21st century, though, highway robbery of travellers has reached a peak of sophistication. At almost every stage of a journey, from the initial booking inquiry to the moment you collapse on your hotel bed, you are at risk of being fleeced.

They left out a good one.

Some years back I flew out to Boston with Mrs Taeper.

We land and jump into a taxi.

The driver seems a bit too quick to0 get our bags into the cab.

When we arrive at the hotel he seems a bit slow to get the bags out, in fact, he just sits there and asks for the fare.

Half my mind is racing around his game plan so I ask Mrs Taeper to empty the boot of our belongings as I don't want to step out the cab to have him drive off into the sunset never to be seen again (along with our bags).

He is one step ahead of me as I pretend to fumble around for the Taxi fare.

I'm straight off the plane and all I have is $100.00 dollar notes. this guy has no change though, so he gets a nice tip of about 50 quid.

I always get some small change when traveling now

[Shotoflight]

Britons will have to save more and work longer, warns Bank of England report

http://www.telegraph.co.uk/finance/personalfinance/pensions/9168487/Britons-will-have-to-save-more-and-work-longer-warns-Bank-of-England-report.html

In its latest Quarterly Bulletin the Bank warns that “saving appears to be too low” and that while increase in house prices benefited many, younger people will have to work harder to maintain the same standard of living.

“If current households choose not to pass on those gains to later generations, they may be able to spend more and save less. Future generations, however, will need to save more for their retirement or work longer,” said the Bank of England.

Savings rates have declined steadily over the past 25 years and the Bank warned Britain had been “saving too little for some time”.

[Shotoflight]

May affect businesses more - but someone will pay in the end.

Stamp prices: First-class stamps to cost 60p

http://www.bbc.co.uk/news/business-17522500

A first-class stamp will cost 60p from 30 April after the regulator removed price controls on Royal Mail.

A second-class stamp will cost 50p - some 5p below the top price allowed under the changes made by Ofcom.

A first class stamp currently costs 46p and a second class stamp costs 36p.

NI business water bills to rise from April

http://www.bbc.co.uk/news/uk-northern-ireland-17521168

Water bills for businesses in Northern Ireland are to rise from 1 April.

The increases are significantly above the rate of inflation but NI Water said they were within the limit set by the utility regulator.

Metered customers will see their combined water and sewerage bills increase by 6.9%. Those without a meter will see a rise of 8.4%.

Ronan Larkin of NI Water said the rises were "unavoidable."

[Shotoflight]

I find it strange that the Chinese, who earn so much less than we do, are much better savers. Do we have a sense of entitlement for the luxury items of life?

No, we are backstopped by the State (benefits) and bankruptcy, unaffordable debt and the black economy has no stigma.

And many will play this - what have they got to lose - no credit card for a couple of years and a fleeting appearance in the smallprint of Stubbs which most don't read or care about.?

If and until you get caught out you can 'live the life'. Because you're worth it.

Actually, on second thoughts, I mean yes.

Edited March 27, 2012 by Shotoflight

[tinbin]

I find it strange that the Chinese, who earn so much less than we do, are much better savers. Do we have a sense of entitlement for the luxury items of life?

I watched a programme a while back that was drawing comparisons between the Uk & China and in one part it was interviewing ppl in the street in Uk ,and in China about how much they saved on a monthly basis. The Chinese save typically 25-50% of their wages because they dont expect sick pay, job security etc. Whereas Britons typically save nothing, or very little.

In fact there was another programme on last night on CH4 about China - it was about how they are expanding & the implications for the rest of the World. I found it a bit of an eye opener. They are much more innovative than what the 'West' give them credit for. They account for something as crazy as a 1/5th of the Worlds population and the Chinese youth appear to be agressively Nationalist with ill feeling towards the West.

The Chinese work much longer hours for much less pay. The are having to expanding globally to ensure that they maintain growth (basically just to maintain their current employment/economic situation). The problem (for us potentially in the future) is that they expect foreign workers to work as hard and for as little as what Chinese workers do. Given that the West is so dependant on the Chinese wealth to keep afloat who knows what the future holds.

To respond to your question I think that we are probably a spoilt generation that 'expect' to have luxuries, sick pay, bonuses, pay rises etc. We judge our success in life by how big our houses are, how big our TV's are & how fancy our cars are. Sad really ... but once you have the 42" TV its hard to go back to the 19". Human nature unfortunately

[Shotoflight]

Ramsey Tweet.

In March 98 500 litres of domestic heating oil cost £77.0. March 2012 @£317. More economy comparisons between 98 & now in today's Irish News

[vman7]

£600 a month? What the hell is he/she driving?

Why would anyone do this....

range rover, mad man!!

[2buyornot2buy]

range rover, mad man!!

Typical.