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Under 25's Who Own Property Are 66% More In Debt Than Renters

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http://business.guardian.co.uk/story/0,,2152221,00.html

Young homebuyers pile up debt

Phillip "Phil" Inman
Monday August 20, 2007
The Guardian
Young homebuyers are loading themselves up with expensive personal loans and overdrafts to pay monthly bills - with dire consequences for their long term finances, a leading debt charity said yesterday.
Under-25s who have bought a home owe two-thirds more than tenants in the same age group, according to figures from the Consumer Credit Counselling Service. Homebuyers also accumulate several more lines of credit, said the CCCS.
An eagerness to jump on the property ladder at a time of rising interest rates was in large part to blame for young people getting into financial difficulties, said the charity, which based its comments on its regular quarterly Debt Dashboard study of 73,000 client records and their ability to repay...../
CCCS chairman Malcolm Hurlston said: "There is a danger in young people getting on the housing ladder before they are ready financially.
"Before taking out a mortgage the under 25s should make sure they can still afford to live and not rely on credit to plug the gaps."

It is sad that so many people bought into the miracle economy and its delusional premise that house prices are real and debt is just opinion. The hypnotic chant of the VIs that you have got to get on the ladder no matter what has done nothing more than create a generation of debt slaves.

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Thanks RB. This is not surprising for me.

The main point is quality of life. How long is this level of debt sustainable for?

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Thanks RB. This is not surprising for me.

The main point is quality of life. How long is this level of debt sustainable for?

If many are borrowing to pay off mortgages I can't see how they are sustaining themselves this long. With easy credit drying up we may see a vast number of repossessions in the weeks ahead.

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Young homebuyers are loading themselves up with expensive personal loans and overdrafts to pay monthly bills

Why can't they see that this is totally unsustainable??? :blink: It's bizarre.

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Thanks RB. This is not surprising for me.

The main point is quality of life. How long is this level of debt sustainable for?

A young couple I know have just bought their first house. Almost fully furnished, the vendors included much of the furnishings in the price. They got the max mortgage they could. The girls' mother got a phone call the other day asking what water rates were and did she have to pay them?

They are early twenties and they work to pay the mortgage, no holidays , no fun. They 'had' to get a house because prices are just going up and up.

The niave are getting screwed.

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Cue the "which is 'deader' - rent money or debt" debate.

It depends. I pay 15% of my net income in rent. An IO mortgage for the same place would require some 35%. I save more than the difference. No brainer for me.

Again, for those on IO mortgages, it is dead money.

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Why can't they see that this is totally unsustainable??? :blink: It's bizarre.

they seem to think their home will be worth 30,000 more every year, so it doesn't matter.

but just imagine if it didn't go up in value......ermm, hang on a minute.

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Why can't they see that this is totally unsustainable??? :blink: It's bizarre.

<dons pipe, slippers, etc >

It is bizarre, but many of the younger people I know really don't 'get' debt, for them it's a (their) way of life.

I'll never forget a flatmate a few years back who never had money to pay the bills coming back with a car he'd just bought on a 5k loan.

There was nothing wrong with the one he already had (which he gave away because he couldn't be arsed to sell it).

Different world, really.

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http://business.guardian.co.uk/story/0,,2152221,00.html

Young homebuyers pile up debt

Phillip "Phil" Inman
Monday August 20, 2007
The Guardian
Young homebuyers are loading themselves up with expensive personal loans and overdrafts to pay monthly bills - with dire consequences for their long term finances, a leading debt charity said yesterday.
Under-25s who have bought a home owe two-thirds more than tenants in the same age group, according to figures from the Consumer Credit Counselling Service. Homebuyers also accumulate several more lines of credit, said the CCCS.
An eagerness to jump on the property ladder at a time of rising interest rates was in large part to blame for young people getting into financial difficulties, said the charity, which based its comments on its regular quarterly Debt Dashboard study of 73,000 client records and their ability to repay...../
CCCS chairman Malcolm Hurlston said: "There is a danger in young people getting on the housing ladder before they are ready financially.
"Before taking out a mortgage the under 25s should make sure they can still afford to live and not rely on credit to plug the gaps."

It is sad that so many people bought into the miracle economy and its delusional premise that house prices are real and debt is just opinion. The hypnotic chant of the VIs that you have got to get on the ladder no matter what has done nothing more than create a generation of debt slaves.

Yes but, we need these people to buy expensive houses so bankers can make bigger bonuses.

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Why can't they see that this is totally unsustainable??? :blink: It's bizarre.

They've probably been brought up with debt, starting with university or maybe even earlier (perhaps their parents utilised debt). Debt has become so familiar to them it's part of the furniture now.

Many people claim to be unable to live without a mobile phone these days yet I remember being at tech. college years ago and there were no such things as mobile phones and I managed ok. What's changed ? Just the 'invented desire' to babble on a phone about nothing in particular and pay for the privilege. I suppose Debt has just become another 'invented desire' .

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A young couple I know have just bought their first house. Almost fully furnished, the vendors included much of the furnishings in the price. They got the max mortgage they could. The girls' mother got a phone call the other day asking what water rates were and did she have to pay them?

If that level of naïvete is repeated across a significant proportion of the population, our economy is right royally sodomised.

Heaven knows what'll happen when she finds out what gas bills, electricity bills, phone bills (though as most under 30s seem to have had their mobile phones surgically grafted to their ears nowadays, she's probably familiar with those), council tax bills etc. etc. are, too.

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It is sad that so many people bought into the miracle economy and its delusional premise that house prices are real and debt is just opinion

It may be sad but it doesn't change the fact that irresponsible borrowers will have to pay the consequences for their decision. They have to have a plasma tv, executive flat, foreign holiday, new car all on credit...

Everybody’s having too good a time to go home until the music stops.

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Why can't they see that this is totally unsustainable??? :blink: It's bizarre.

Ah, but for most of their adult lives credit has been super-cheap and (more importantly with a credit crunch in propspect) easily attainable. Thus, you could keep piling on additional debt and the costs of servicing it were low.

As far as they're concerned, when you need more cash you simply ask for an extension on your credit cards, extend the overdraft or take out another loan. After all you can just bung it onto a MEW on your house can't you? :blink:

The fact that they are using borrowed money simply does not occur to them.

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It depends. I pay 15% of my net income in rent. An IO mortgage for the same place would require some 35%. I save more than the difference. No brainer for me.

Again, for those on IO mortgages, it is dead money.

what would someone in your position to when they are 65+ years old?

if they had no home they would have to rely on their pension to pay off the rent- the alternative you might suggest is that if you buy a home with a massive mortgage you'll be paying it off into your pension anyway- either way you are screwed, unless you've paid the mortgage off.

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what would someone in your position to when they are 65+ years old?

if they had no home they would have to rely on their pension to pay off the rent- the alternative you might suggest is that if you buy a home with a massive mortgage you'll be paying it off into your pension anyway- either way you are screwed, unless you've paid the mortgage off.

It's still better than having to pay all the capital when the IO expires.

Not my situation, luckily for me.

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Everyone is different so tarring with one brush should be avoided.

Some will have expectations of larger salaries in years to come. Some will be lucky.

Some will have expectations of an inheritance. They'll watch in horror as loved ones live to be 110.

Some will crash and burn. Suicide rates will soar.

HPCers will laugh in their faces. Some will never buy a house. Always waiting for the time to be right when, with hindsight, the time has been ok longer than their 'glass half full' could recognise.

:)

GG

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It depends. I pay 15% of my net income in rent. An IO mortgage for the same place would require some 35%. I save more than the difference. No brainer for me.

Again, for those on IO mortgages, it is dead money.

if you have done that for more than a year, and with HPI at double digit rates, I cannot imagine that you are beter off for renting if you include the fact that your property would have increased in value over that time. This is not to say that house prices may not fall / renting may not be the better option going forward, just that I believe that it has been better to own.

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HPCers will laugh in their faces. Some will never buy a house. Always waiting for the time to be right when, with hindsight, the time has been ok longer than their 'glass half full' could recognise.

:)

GG

I saw a quote on here that the optimum time to buy a house will be in around 9 years. You could buy now and have your mortgage paid off by then if you were determined enough.

In the majority of situations in life you are better just getting on with things rather than waiting. If you don't think house prices are a good deal at the moment, fair enough. But get on and do something else with your money instead. Sticking the money in the bank and watching the real value be eaten away by inflation (assuming 4% CPI you need a 7% interest rate to just break-even after tax) is not a long term recipe for financial success

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if you have done that for more than a year, and with HPI at double digit rates, I cannot imagine that you are beter off for renting if you include the fact that your property would have increased in value over that time. This is not to say that house prices may not fall / renting may not be the better option going forward, just that I believe that it has been better to own.

Maybe you're right. Even though I would still feel pretty unconfortable with a huge mortgage over my head, considering what's happening now...

Saying that, I wasn't in the position to buy 2 years ago.

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I saw a quote on here that the optimum time to buy a house will be in around 9 years. You could buy now and have your mortgage paid off by then if you were determined enough.

Unfortunately I'm not determined to either ask for a pay rise from £26k to £40k, or sell crack.

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Keeping up the Jones's!!!!

NO it's all about need! Mobile phones are needed to confirm what is for dinner. It needs to have Camera to be able to show off our brand new BMW Mini's, which is needed to show your friends that a brand new Polo just don't cut it any more, not even with a big bore exhuast and custom Alloy's.

A luxury appartment is NEEDED aswell (by luxary apartment, i actually mean a run down flat with no parking, 3.99 per sq. m. laminate flooring and of course an en-suite, with bathroom furniture only a midget could aim into).

A Ipod is of course a must, otherwise how would you listen to your MP3's, Sky to watch programs about how much the value of the flat is going up, a PC cable of running weather simulation, to watch at p0rn on the 8Mb broadband, Sat Nav, because you never know, 56" plasma is of course needed, otherwise what would you connect the playstion 3 too.

Get with it guy's.......

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Ah, but for most of their adult lives credit has been super-cheap and (more importantly with a credit crunch in propspect) easily attainable. Thus, you could keep piling on additional debt and the costs of servicing it were low.

As far as they're concerned, when you need more cash you simply ask for an extension on your credit cards, extend the overdraft or take out another loan. After all you can just bung it onto a MEW on your house can't you? :blink:

The fact that they are using borrowed money simply does not occur to them.

Sounds just like my friends Steve & Debbie.

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