Jump to content
House Price Crash Forum
Sign in to follow this  
isv

So Who's Got All The Debt Then?

Recommended Posts

We've recently STR and are renting on what I can only describe as a "Footballers' Wives" estate near Worcester. New 4/5 bed exec homes where the Jones' have been well and truly kept up with ... every house has a manicured lawn and two fresh cars are the norm (new exec for him - Freelander/Mini for her).

My father-in-law who comes from pure working-class stock is gobsmacked... he tells me the whole estate most be on the "never never" as the materialism/consumption seems rampant. My new neighbours all seem to have "typical" jobs with the odd middle manager here and there...

So how the heck do they afford it all? I can only assume that they must be in debt to their eyeballs and beyond... which got me thinking... does anyone know how the £1 trillion+ of debt is distributed across the UK. What portion is mortgage, consumer credit, what percentage of cars are on contract hire...?

It would be really useful to know just how much "stuff" is actually owned outright by its keeper...

Alan.

Share this post


Link to post
Share on other sites

Does anyone know if Student Loans (the official type, not highstreet loans/overdraughts etc racked up as a student) are included in the figure?

Share this post


Link to post
Share on other sites
Guest Charlie The Tramp
We've recently STR and are renting on what I can only describe as a "Footballers' Wives" estate near Worcester. New 4/5 bed exec homes where the Jones' have been well and truly kept up with ... every house has a manicured lawn and two fresh cars are the norm (new exec for him - Freelander/Mini for her).
the whole estate most be on the "never never"

To their friends and neighbours. they probably seem like high fliers who are sitting pretty. They earn at least £50,000 a year, have high powered jobs, big houses, and expensive cars.

But looks are notoriously deceptive and debt experts warn that impoverished professionals are on the increase.

There has been a sharp rise in the number of people or families who take home £3,000 a month net but are seeking help from the Consumer Credit Counselling Service.

Large numbers of middle class families seem to have gone deep into hock through credit cards, loans and remortgages to keep up appearances.

But rises in interest rates and higher household bills have driven many to the edge of financial meltdown. <_<

Share this post


Link to post
Share on other sites
Guest Charlie The Tramp
I've often wondered about that too.  Anyone?

Probably not. The amount of debt is what data the BoE receive from the lending institutions.

Share this post


Link to post
Share on other sites

I live in worcester in the city centre, so i have some anacdotes....

I know one couple who have now split up, both in late twenties who own one of those houses in a new estate near tescos. Both were working, both didnt go to uni, they bought the house together about 10 years ago for peanuts, its now worth MEGA money. He drives a impreza, she drives a convertable...

She slept with his best mate, and moved his best mate into the house, he has screwed her for half the current value of the house, 250k ;p

http://www.nethouseprices.com/index.php?op...rch_id=17182209

In 2000 properties were selling for 160k, today they sell for 250->300k

260k property

http://www.rightmove.co.uk/viewdetails-794...a_n=11&tr_t=buy

However when these were being built they were sold for peanuts, in 96/97 the above detatched property sold for sub 100k!!

http://www.upmystreet.com/property/prices/.../worcester.html

flats sold for 30k

http://www.upmystreet.com/property/prices/.../worcester.html

terrace for 40k

http://www.upmystreet.com/property/prices/.../worcester.html

At the time i was about to start university, but the average salary at the time was

'However, in 1995 the average gross pay for a full-time worker was £336.30 a week, or £17,487.60 a year'

http://uk.biz.yahoo.com/moneyweekly/1995prices.html

Two people on an average wage of £17,487.60 (£34975.2) in 96/97 could afford a large dettached house in worcester!!!! Everyone could afford some kind of property, it was the economically sensible thing to do at the time. Property prices have soared since 96, and people have released equity, and gone mad on there credit cards. There orginal morgage payments are non existant, because intrest rates have dropped and they have been able to afford to buy other things on credit.....

However, there is only one reason why houses were so cheap in worcester in 95/96/97, the preceding HPC!! Prices will return to these multiples, they did after the last crash afterall ;P

Edited by moosetea

Share this post


Link to post
Share on other sites
...

Two people on an average wage of £17,487.60 (£34975.2) in 96/97 could afford a large dettached house in worcester!!!!  Everyone could afford some kind of property, it was the economically sensible thing to do at the time. Property prices have soared since 96, and people have released equity, and gone mad on there credit cards.  There orginal morgage payments are non existant, because intrest rates have dropped and they have been able to afford to buy other things on credit.....

...

You are quite right but the thing that I find so alarming and of concern is the concept of 'releasing equity' or MEW - none of these people have been truly releasing equity they have simply been extending their mortgage (debt) to give themselves a cash loan...???

I am sure the perceived wealth of so many has given rise to so much of the growth in credit - this perception that having made so much on their property folks can 'afford' to take on greater loans is now rapidly unwinding. I also suspect that many many people simply have no concept of the 'big picture' and what is really happening out there - this is depressing as ignorance has caused many people to unwittingly dig a bl**dy big hole to undermine their future.

It is no secret that we are emigrating (perhaps the purest form of equity withdrawal) and when this weekend I explained to a mate of mine that I thought the economic future over the next 5 years looked pretty grim and hence it would be a good time to go and build a future elsewhere the response was: "the economy has never been better - what are you talking about!"... but hey, perhaps he's right (he works in local government after all) and those of us in the minority who think things will get a lot worse very quickly don't know what we're talking about and, after all, all this credit (debt) is bearable, healthy and good for all?

I know it sounds smug, but I don't mean it to be, but I am so *relieved* to have sold up (even after giving my buyer a £45k discount) and to be totally debt free with cash in the bank. It gives me a feeling of great freedom and that is perhaps something you cannot truly appreciate if you've got a tonne of debt clouding your every thought.

Alan.

Share this post


Link to post
Share on other sites
Probably not. The amount of debt is what data the BoE receive from the lending institutions.

Thanks Charlie

Well, Natwest purchased a large tranche of debt from the Student Loans Company about 6-7 years ago.

It would be interesting to know if that is included in their figures.

NDL

Share this post


Link to post
Share on other sites

A bit off the tread, but an example of just how daft folk are these days to weigh themself with stupid debt.....

Met up with a friend of mine over the past weekend. Good job, earns ca. £32k. Has recently bought on a 8.5 x anual income mortgage!

I was gob smacked. I thought this sort of thing was only heard of on HPC..!!!

I just don't understand the current mentality of people. We (us HPC'ers exempt) seem to have lost all grasp of money.

This £1.1 trillion .... it's going to hurt, maybe not today but for sure some day - at least i hope it does benifit us more financially responsible folks with at least our bank balances in the black.

Sigh...!!!! :(:(:(:(:(

Anyway, back to the wine...............!!!

Share this post


Link to post
Share on other sites

Total UK personal debt now stands at around £1.1 trillion.

http://www.creditaction.org.uk/debtstats.htm

According to that website this is broken down as follows:

£910.5bn is mortgage debt (gives an idea of the size of the current bubble).

£188.5bn is consumer credit lending, of which £55.69bn is credit cards alone.

Compare this to the total UK national debt of close to £450bn (was Mr Clown not meant to be clearing some of this for us? Look at the last years in the table at the bottom.).

http://www.dmo.gov.uk/bginfo/f1ndd.htm

It's interesting to note that figures only go up to 2002, so who knows how much has been added in the last few years by our most prudent of chancellors.

I read somewhere (can't remember where or I'd cite it too) that 8 years ago, TOTAL personal debt (i.e. including mortgages) was only around the £400bn mark, meaning that £700bn has been added in just 8 years (hmmm, what happened in 1997?).

Indeed, the first website has a good few soundbites to drop into conversations:

"UK personal debt is increasing at the rate of £1m every 4 minutes."

"The growth rate [of UK personal debt] remains strong at 11.5% for the previous 12 months. 2004 saw the largest single-year increase in debt (£116bn) since the Bank of England was founded in 1694."

"Average [amount] owed by every man, woman and child in the UK is approximately £18,454 (including mortgages)."

I don't think we're merely witnessing the unwinding of simply a house price bubble, but a personal DEBT bubble of unprecedented proportions.

Share this post


Link to post
Share on other sites

Quite right!......People have lost all perspective of how much £200,000 (an ave HP)even in the North!..........actually is in terms of goods in the shops....and their salaries!...........£200k is megabucks.........and it's just beginning to dawn on Joe Blow......hence the forthcoming C.e.e.e.e.e.erash!

Share this post


Link to post
Share on other sites
Total UK personal debt now stands at around £1.1 trillion.

http://www.creditaction.org.uk/debtstats.htm

According to that website this is broken down as follows:

£910.5bn is mortgage debt (gives an idea of the size of the current bubble).

£188.5bn is consumer credit lending, of which £55.69bn is credit cards alone.

...

"Average [amount] owed by every man, woman and child in the UK is approximately £18,454 (including mortgages)."

I don't think we're merely witnessing the unwinding of simply a house price bubble, but a personal DEBT bubble of unprecedented proportions.

Christ! What an informative link you provided - thanks. Everything a lot clearer now :o

I never appreciated just how bad the debt situation is. I find the figures for consumer credit particularly worrying - here's another snippet from the above site:

"Average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to £4,071 per average UK adult at the end of May 2005."

I would imagine that a graph of the age distribution of this particular debt would be quite illuminating. I would bet that most of that debt is hanging around the necks of younger folks and hence the true average amongst borrowers would be far, far higher.

But, for me, the most depressing info concerns peoples' attitude to money and finance in general. Here's another snippet that really makes my blood boil:

"Nearly four out of five people do not know that APR refers to the interest and other costs of a loan, four in ten admit they do not understand mortgages or ISAs, and a third lack confidence in their financial affairs. These are some of the results of a survey conducted recently by Mori. One in five did not understand the concept of inflation. Nearly a third did not know that insurance products are designed to protect their owners from unforeseen events. Only 30 per cent could calculate four per cent interest on £2,000 over two years. "

Why in this age of the Internet and unlimited amounts of information are people acting so thick? I'm fully aware of the rise of chavism and general meltdown of society :angry: but for the UK to have any future at all we're going to have to 'fix' the problem. The Government will quite happily run countless TV ads telling us to stop drinking/smoking as they ruin lives... but where are the prime time adverts telling people: "Don't be a moron, don't borrow - just say no". Somehow, there are perhaps just too many vested interests to ever let this happen... :(

Perhaps what we're going to get is a good old dose of Darwinism - survival of the fittest and all that. Let the crushing pain of immovable debt finish off the idiots. This would all be fine apart from the fact that it will be the honest sensible types who've lived more frugally who will be asked to dig the other lot out.

Alan.

Share this post


Link to post
Share on other sites
Guest Charlie The Tramp
I never appreciated just how bad the debt situation is. I find the figures for consumer credit particularly worrying

Have a chew on this then.

It took 600 years of the banking system for personal debt to reach half a trillion pounds. That has more than doubled since 1997 the year the magician was given the job of managing the economy. <_<

Share this post


Link to post
Share on other sites
Most of the people i have sold buy to let property to have debt of 2-3 million each.

If I had 2-3 million, I'd rather take the £150K a year interest rather than worry about keeping houses uptogether for my tenants.

Share this post


Link to post
Share on other sites
but where are the prime time adverts telling people: "Don't be a moron, don't borrow - just say no".  Somehow, there are perhaps just too many vested interests to ever let this happen...  :(

Because for a government a certain amount of debt is good, it keeps the economy tickting over, without debt economies dont work.... Telling people not to borrow would be like telling everyone we need to go into recession...

Edited by moosetea

Share this post


Link to post
Share on other sites
I live in worcester in the city centre, so i have some anacdotes....

She slept with his best mate, and moved his best mate into the house, he has screwed her for half the current value of the house, 250k ;p

http://www.nethouseprices.com/index.php?op...rch_id=17182209

In 2000 properties were selling for 160k, today they sell for 250->300k

Its ok moosetea, we all know where he lives now! We'll go beat him up!

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.