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Young And Low-Paid Workers In Uk 'most Vulnerable To Interest Rate Rise'

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Report says young adults suffered 36% drop in savings since 2005 while top 20% of earners ‘more financially secure today than going into the downturn’

Britain’s younger workers have few funds in the bank and are vulnerable to higher interest rates following a prolonged slump in incomes, according to a leading thinktank.

The Social Market Foundation found that 26 to 35-year-olds were among the worst affected by the financial crash in terms of lost wealth while other groups emerged in better shape.

Chancellor George Osborne is expected to say in next week’s budget that young workers have been helped by increases in the income tax personal allowance to £10,600 from April and initiatives like the help-to-buy scheme, which allows first time buyers to purchase a home with a relatively small deposit.

However, unlike older workers and those in the top half of the income scale, younger workers mostly missed out on the rising stock market values and the recovery in the property market.

According to the SMF report, the 26 to 35-year-old group has suffered a 36% drop in savings since 2005 – from a median £461 to £296 – while the top 20% of earners “are far more financially secure today than going into the downturn”.

Across the UK, fewer individuals are weighed down by non-mortgage debts than in 2005 after seven years of consolidation and repayment. But those who remain in debt have seen a 17% rise in their liabilities, making them more, not less, vulnerable to another crash.

Younger workers, weighed down by student loan payments, are also more likely to have unaffordable credit card bills, car loans and overdrafts than other age groups. [more at link]

http://www.theguardian.com/business/2015/mar/10/young-and-low-paid-workers-in-uk-most-vulnerable-to-interest-rate-rise

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This article is complete nonsense. Young people don't have savings. They never have. And now, they don't have mortgages. An increase in interest rates is irrelevant to them.

A rise in interest rates will slaughter baby boomer BTLers and will be a massive benefit to young people.

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According to the SMF report, the 26 to 35-year-old group has suffered a 36% drop in savings since 2005 – from a median £461 to £296

£165 over 10 years seems to be an odd stat to focus on.

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This article is complete nonsense. Young people don't have savings. They never have. And now, they don't have mortgages. An increase in interest rates is irrelevant to them.

A rise in interest rates will slaughter baby boomer BTLers and will be a massive benefit to young people.

Quite, it is using the young as false argument to protect other VIs. Another attempt at can kicking.

Edited by LiveinHope

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From the guardian article


The report said that in 2005 median net financial wealth among the bottom fifth of incomes was around £120 per person. By 2012-13, that had fallen to zero. The second to bottom group had 47% less in net financial wealth compared to 2005. Meanwhile, in the top income group, median net financial wealth rose by 89%.

Emphasising the divergence between rich and poor, the report found that the bottom 20% of earners have 57% less in financial wealth than the bottom 20% in 2005. In contrast, the top income group has 64% more in financial wealth than the top income group in 2005.

Osborne is expected to announce further measures in the budget to support first time buyers, amid warnings from mortgage providers that younger buyers cannot afford to purchase a home without significant state help.

The findings will also put pressure on the Bank of England to maintain low interest rates, possibly until the end of the decade, to prevent hundreds of thousands of younger workers from defaulting on their loans.

A separate report by the Resolution Foundation thinktank found that as many as 2.3m “highly geared” mortgage payers are who spending more than a third of their after-tax income on repayments could be forced to default by 2018 if interest rates rise.

How much did it cost for them to state the obvious yet again that the economy is still wrecked.

Edited by billybong

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Not sure if anyone else remembers life as a young adult, but saving was never a prime concern in my day. Guess we had it good back then when we could afford to go to spain for a week. Kids nowadays only have Thailand and Bali to look forward to.

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Ultra low rates and loose monetary policy benefit rich asset holders. Particularly leveraged ones.

Always has done, always will.

They always say this to garner support for ongoing increases in inequality forged by their policies.

Marginal borrowers borrowing on high rates simply need to default. In the long run though, the reduction in asset prices would vastly improve the overall position of the young.

Assumes steady state rate of unemployment.

Young people benefit from having jobs.

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