Thursday, Feb 01, 2007
The increasingly sad "Tale of the tape" - credit action stats
Firstrung: "Debt is the slavery of the free" Credit action stats Feb 2007
According to uSwitch in the last 12 months almost eight out of ten borrowers were issued loans without the lender carrying out any checks to verify that they could afford to repay the debt and almost 1.6 million loans have been approved without properly verifying people's incomes. 763,000 loans were issued for debt consolidation purposes and yet 91% of these borrowers were not asked to prove that other forms of credit had been closed with the proceeds of the consolidation loan
Posted by converted lurker @ 12:18 PM (139 views) Add Comment
15 Comments
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1. bidin'matime said...
I can believe it.
2. dohousescrashinthewoods said...
Is Gordon taking out an IVA?
3. p. o. o. r said...
WOW - some great statistics - "Average household debt in the UK is £8,791 (excluding mortgages)" "The average interest rate on credit card lending is currently 16.84%" This means that the average person is giving away each month in interest over £100 to the banks / finance house - no wonder they make such huge profits.
The answer is don't get married, don't go to university, don't have children, and don't buy a house.
4. paul said...
I have a lot of trouble with the "average age of the FTB" stats.
There are varying stats claiming it to currently be 25-39 but no definitive answer. Any ideas?
5. talking rot said...
Paul
I have real trouble with any figure which is described as average. I have yet to find some one who is average and the world is too grey in colour to make black-and-white averages meaningful. Given that the average house price in some parts of Glasgow, and average Glasgow wage, is different to the average house price in some parts of London, and average London wage, one would expect the average age of the First Time Buyer to be different. This could be why the average age given in the article is somewhat unexpected.
Perhaps a question which could be answered more easily is "What is the average age of first time buyer, and their earnings, in the area where I am looking to live?"
6. paul said...
Well, actually I don't agree TR.
Any variation in average wages is usually balanced by the variation in average FTB house prices, so the age shouldn't vary that much.
7. converted lurker said...
the FTB stats are from the CML and therefore unreliable by their own admission. Average mortgage approx. 115k average deposit approx. 35k is incorrect and is as a result of the CML not seperating FTBs from; returnees, those that have nothing to sell, and one off BTL purchasers.
8. converted lurker said...
the FTB stats are from the CML and therefore unreliable by their own admission. Average mortgage approx. 115k average deposit approx. 35k is incorrect and is as a result of the CML not seperating FTBs from; returnees, those that have nothing to sell, and one off BTL purchasers.
9. paul said...
My point is, at the end of the last boom, the avergae age of the FTB was around 31. I expect its even higher now, as affordability is even worse than in 1991, but I think this stat is being all but hidden because it is a true reflection of the state of the market rather than the glossy fiction that were peddled.
10. Dugmug said...
Whilst the comment, "income multiples reached their highest ever level - 3.29 times the average first-time buyer household income" seems bad enough, what a lot of these articles fail to mention is that, "Back in 1997, first-time buyers’ average income was in line with national average earnings. By 2001, their income was 20% higher, but last year the average new homebuyer earned £33,202, which is 35% higher than national average earnings."
In other words, multiples are now 3.29 times the incomes of those that earn on average 35% MORE THAN AVERAGE themselves - so for mere mortals the multiple is a lot higher than 3.29! Using the figure of the average first time buyer income upon which to report the current multiple, but failing to mention that the average first time buyer income has itself also increased substantially (because only those on higher wages can now afford to be FTBs in the first place), is another little trick to make things look not quite as bad as they actually are - lies, damn lies and statistics. :-)
11. dohousescrashinthewoods said...
CML FTB stats including anyone who is buying without selling was a shocking story.
If "CML FTBs" are 10% of purchasers and BTL accounts for 8% of the housing market (I seem to remember those numbers from somewhere) then, non-BTL purchasers are, say, 2%. Take out returners and special situations and the real figure would be, what, 1%-1.5%?
12. talking rot said...
Paul
We shall have to agree to disagree. But if I can try and convince you:
1. Average salary in Deveon/Cornwall (well, the SW) is less then in London. So it takes potential FTBs longer to save up a deposit for a house. So potential FTBs will be older then in London.
2. Harrogate area (although NOT Harrogate itself) allows couples to work in York, Leeds, Tyneside and earn above average salaries. Average price of homes in that area (EXCLUDING Harrogate itself) are lower then in London but couples are earning more so they can save for a deposit more quickly; thus they are younger.
An average over a Nation is meaningless. An average over a small, clearly defined and bounded population has some meaning.
I hope I've convinced you but I accept I probably haven't.
13. paul said...
Aha. But you've assumed that house prices are the same in London, Cornwall and Harrogate.
They're not.
So you haven't convinced me - you're right about that.
14. talking rot said...
Paul
That is the whole point, house prices are different in London, Cornwall and Harrogate area.
Where house prices are high, but wages are lower, FTBs will be older as they need more time to save for a deposit. This is found in the SW where wages are low compared to house prices. For the lucky couple in the Harrogate AREA (not Harrogate itself), house prices are low relative to their wage.
A man earning £25K per year can buy a certain type of accommodation in London but he would get more for his money in the Harrogate area. It would take him more time to save for a deposit, say 15%, in London because house prices are higher then it would in the Harrogate area.
So the use of averages is meaningless unless it is an average of an exactly defined population.
I've got better things to do now ...
15. paul said...
Mmmm, you're almost there but think of this. That man would earn less money in Harrogate, doing the same job, so the relative advantage diminishes. It is not useful of course to think of someone working in London and buying a house in Harrogate (right?).
So the FTB average age axis is meaningful because the price of houses is universally decided upon A) Credit lending limits which are decided by the lenders and B) The buying power in the local area which is a function of salaries of people living in that area. These are given constants in the model - they may change over time but they change universally, as does the average age of the FTB, which is why it is NOT meaningless. Average house prices are actually meaningless because folks in Wilmslow won't care about house prices in Wokingham.
Not everyone is meant to understand statistics, so I'm being patient here but you insist on getting it muddled. FTB average age is a constant.
Get it now? If not then don't worry.
Average age of FTBs is a good barometer of accessibility of affordable housing in the market and I suspect that its risen sharply recently, although reliable statistics are very hard to come by. The DLCG uses stats from a few years ago, as do many of the lenders. I suspect there's selective amnesia going on there.