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Realistbear

Guardian: U K Debt Levels Seen As A "rising Tide"

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http://money.guardian.co.uk/businessnews/s...1832852,00.html

Banks raise fears of rising tide of bankruptcies

Phillip Inman

Saturday July 29, 2006

The Guardian

Soaring bad debts and personal insolvencies dented profits at Alliance & Leicester and pushed internet bank Egg into a loss yesterday,
adding to fears that thousands of Britons are close to defaulting on mortgages and loans
.
Six-month figures from Egg showed a £40m loss after its parent company, Prudential, was forced to increase provisions for bad debts by 42%.
A&L suffered a 60% rise in bad debts
for the first six months of 2006, up £18m from a year ago to £48m.
Both banks blamed practices that stretched the lending criteria on personal loans to include people with lower credit ratings. Both said they had moved swiftly to detect the problem and focus on more creditworthy customers.

Serves the stupid fools right! The big move into sub-prime loans was bound to collapse. Its over--the lenders have no one else to peddle debt to. This makes my weekend.

:lol::lol::lol::lol::lol::lol:

Edited by Realistbear

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For many of these people rising house prices were an easy supply of money, as long as prices kept rising they could keep borrowing.

With the market not rising as it was that supply of cheap finance is starting to disappear, their safety net has fallen away.

Personal savings have also disappeared in the race to be richer than the Jones'es.

Now there's nothing left to catch people when they fall.

I can't say I feel happy about any of this, people were misled to believe that they could have everything now, without ever having the hardship that comes with instant gratification.

But this has happened so many times before in history, handing out cheap money *does* make people feel like they've all won the lottery, makes them feel like they're *all* going to be rich.

Until the liquidity dries up, and everyone realises that hyper inflation doesn't do any good.

And the big wheel keeps on turning...

Edited by BandWagon

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If they crack down on irresponsible lending in this country the housing market dies overnight. They way they are going it will be delayed for a few more months.

Edited by Realistbear

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handing out cheap money *does* make people feel like they've all won the lottery, makes them feel like they're *all* going to be rich.

Yes and also keeps them voting for Gordy and NU Lab in gratitude as they indulge themselves in an orgy of spend and debt.

Win win really, the voters are happy and Gordy gets the top job

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From Daily Mail City&Finance section Thursday 27th July:

Northern Rock expects mortgage arrears to 'creep up' as consumers battle energy costs, rising interest rates & low public sector pay rises

(but is confident enough in its own prospects to raise its profit growth f'cast from 15 to 20%. It's shares climbed 8p to 1128p after good first half results)

The chief exec Adam Applegarth expects the mortgage market to remain "robust" but adds "I do think the UK economy is gently slowing... over the next few years we would expect a gentle drift up in arrears". He does not expect a sudden surge in write-offs although they have put aside £44.5m to cover bad debts (up from £26m the previous year) NR's arrears for residential are half that of the industry average.

NR expect house price inflation to ease in the second half and to 'fall in line' with avge earnings over the medium term. The bank provides 6.7% of UK mortgages gas around 14.3% share of new lending

Hope you find this interesting

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er - thats only 480 people defaulting on an average loan of 100k... or 4,800 on an average of 10k.

It's not like the sky is falling on their heads - core operating profit last year of £548m, with mortgage lending at £11.1bn and new personal loans at £2.5bn, total loan balance £3.5bn

So around £60m a month in interest payments (assuming 5%).

Not sure how worried they are about £48m worth of defaults in a year...

http://www.alliance-leicester-group.co.uk/...2005summary.pdf

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er - thats only 480 people defaulting on an average loan of 100k... or 4,800 on an average of 10k.

It's not like the sky is falling on their heads - core operating profit last year of £548m, with mortgage lending at £11.1bn and new personal loans at £2.5bn, total loan balance £3.5bn

So around £60m a month in interest payments (assuming 5%).

Not sure how worried they are about £48m worth of defaults in a year...

http://www.alliance-leicester-group.co.uk/...2005summary.pdf

It is probably the trend line that has them worried:

adding to fears that thousands of Britons are close to defaulting on mortgages and loans.

Its the ticking time bomb scenario--these bad loans are coming home to roost and an awful lot of them are out there with the terrifying multiples, didgy self-cert and IO "desperation loans." With rampant inflation in the necessities there is precious little left over to feed oversize mortgages.

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not if by accepting the risk of that I gain the opportunity to doubly my take home in a normal month. Thats pretty much what contracting is all about... ;)

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  • 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%



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