Tuesday, Nov 07, 2006

Debt down for first time since early 90s

Reuters: Debt down for first time since early 90s

"Debt, other than mortgage borrowings, is growing at its slowest rate for the past 13 years, and is falling in real terms, according to the latest borrowing monitor from Alliance & Leicester (A&L)."

..."other than mortgage borrowings"...classic.

Posted by miniftse @ 09:55 AM (482 views)
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14 Comments

1. Chillilizard said...

Dare I say it? Finally the insanity has turned.

Tuesday, November 7, 2006 10:10AM Report Comment
 

2. Nohpc said...

Why is there interest in debt other than mortgage borrowings? Don't mortgage borrowings make up the massive percentage of debt as a whole? This article has me really confused.. it actually sounds pretty bleak to me.

Tuesday, November 7, 2006 10:13AM Report Comment
 

3. waitingfor hpc said...

well with iva's letting people of 1000's of debt and MEW i am not surprised! Where will this cycle end though?

Tuesday, November 7, 2006 10:24AM Report Comment
 

4. kpjcomp said...

Even more proof that people are Mew'ing away!!!. A&L must think the general public are stupid!!.
And Mew'ing is good for the banks, because your not going to be able to take the so called easy route of IVA's.

I've lost track of the people I know who have re-mortgaged to pay for new things
And I bet when this mortgage is placed into the stats it will be classed as a house price rise.

Tuesday, November 7, 2006 10:28AM Report Comment
 

5. Bubbles. . . said...

I totally agree.. Only when the MEW cant afford the repayments on the mortgage fixed rates protect you form IR rises but when they go up
affordability takes over...Crash n Burn

Tuesday, November 7, 2006 10:28AM Report Comment
 

6. Sam said...

yes, people are getting more asuste, thinking about the long term and knuckling down to pay for the lavish lifestyle they've had in the last few years.

or perhaps the frogs are starting to feel the water getting hot.

Tuesday, November 7, 2006 11:37AM Report Comment
 

7. talking rot said...

This is poor journalism. Debt is NOT down but the rate at which the people of the UK are adding to their debt is slower now then before. The poor quality of the journalism is demonstrated by the fact that no explanations are given why people are reducing the rate at which they are taking on debt. Is it because:

1. They are facing a declining disposable income due to rising [council tax, heating, petrol, food etc] bills?
2. People are facing increasing job insecurity and are looking to reduce out goings where possible?
3. Is is a case that debt figures are reduced as a percentage of debt is written off as a loss when some one takes out an IVA?

Reuters may be back in proft but I am not impressed by the standard of journalism.

Tuesday, November 7, 2006 11:53AM Report Comment
 

8. uncle chris said...

The last point is an important one. I've been monitoring a particular town in Shropshire for around a year now, and have noted all the properties for sale in EAs and conducted follow-up on the land registry database. Of the houses that were entered on the registry, 38% were never listed for sale in any of the local EAs. That would suggest that around 38% of the land registry house price index is not based of what people are prepared to pay for houses, but on what valuation MEWers can convince the banks to put on their house. I just wonder when the penny will drop with MEWers that they are not "releasing capital in their homes" but borrowing ever increasing amounts of money to fund lifestyles they cannot afford.

Tuesday, November 7, 2006 12:01PM Report Comment
 

9. Distant_daz said...

This is real dross. I particularly like this bit;

"We have not seen consumer borrowing this subdued since the recession of the early 1990s.....The good news is that, this time, the economy is performing well and employment is at an historic high."

Chicken and egg?

So, what happens when people stop spending money?

Tuesday, November 7, 2006 12:46PM Report Comment
 

10. Headmelter said...

what is a MEWer and a mew, please.

Tuesday, November 7, 2006 02:34PM Report Comment
 

11. Bfskinner said...

thanks talking rot,

i just clicked to add more or less the same thoughts as you. I expected more from reuters

BFS

Tuesday, November 7, 2006 08:14PM Report Comment
 

12. paolo88888 said...

Headmelter,

I believe that MEW stands for "Mortgage Equity Withdrawal" and refers to the practice of increasing the amount of mortgage on a property. Typically, this is possible because the if house prices have increased it provides security for a greater loan and if the owners have progressed in their careers they can afford larger repayments.

A point not mentioned is whether recent MEWing is remortgaging in which a new larger first mortgage is taken out, or a second mortgage. This is important if there is going to be an HPC because in the first case the bank is more at risk because it is now lending right up to limit of the security, but if someone takes out a second mortgage, all proceeds from a possible repossession go to the first mortgage holder first. Critical in the discussion of "systemic banking failure" that often crops up here!

Tuesday, November 7, 2006 09:09PM Report Comment
 

13. inbreda said...

Headmelter - in addition to Paolos comments - the vested interests like to push news stories that talk up the property market. For a long time now they've talked about 'House prices can only go up - evidenced by the fact that home owner mortgages are up 6% YoY'.

They make it look like they're talking about house prices, when in fact they are talking about an amount of debt. MEW is a hidden factor in that increased debt as MEWing does not represent house purchases much less house prices.

Tuesday, November 7, 2006 11:10PM Report Comment
 

14. Headmelter said...

many thanks.

Wednesday, November 8, 2006 12:03AM Report Comment
 

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