Wednesday, September 9, 2015

A housing BOOM!!!

Britain is sitting on a new £173bn debt time bomb - and with rates set to rise it's ticking even louder

An investigation by Money Mail has uncovered the startling rise in debt levels due to people splashing out on new cars, TVs, conservatories and home improvements.

Posted by hpwatcher @ 09:17 AM (5999 views)
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9 thoughts on “A housing BOOM!!!

  • i remember the 90`s says:

    People never learn ,in the 70`s when I started work u could not borrow as not many would lend but they would have borrowed if they could have its always been like that imo.

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  • “startling rise in debt levels due to people splashing out on new cars, TVs, conservatories and home improvements.”

    I knew we’d be in trouble once the conservatories got back into power 🙂

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  • I was thinking about this the other day. When rates are low people will borrow because it’s cheap to do so.
    If rates were given a quick sharp shock people would start repaying their debts because the debt becomes expensive.

    The government have concisely decided that they want people to borrow more and have set interest rates accordingly.

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  • I used to pay much higher interest rates on a mortgage. The thing is that I cant remember it making much difference. A few less meals out or maybe hold on to the car a bit longer was all it took.

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  • DM makes it sound as if we’re all borrowing to buy toys. Many borrow because they’re hammered to the floorboards. Nothing here about student debt – £40k+ per student according to IFS.

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  • A lot of my mates in the 80’s bought new cars, holidays, toys on the mortgage, and have continued to do so ever since. They are all now approaching 60 and have precious little equity in their properties. They will become the new renters as soon as mortgages are refused to them because of age.

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  • So interest rates are about to RISE? When?

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  • [email protected]% agree. I know loads of people where their mortgaged has doubled or tripled over the years. They have remortgaged for debt, remortgaged for home improveents and remortgaged for general spending. Some have several buy to let homes and they have sucked as much money as they can out of them. A large part o our gdp over the years has come from this activity,On the oustide they look pretty good, but their debt to interest ratio has rocketed.

    [email protected] when i was uni back in the late eightees the maximum the bank would lend was £500. I remember thinking this was quite a big debt to deal with when I left.One of the biggest problems with student debt is that it creates a surreal feeling that debts doesnt matter and can be pushed down the line. If you have a 50k student debt, what is a few grand more on your first credit card in your first couple of years of earning? What if that then goes up to 10k plus? Plus many graduates today were in their early teans the last time interest rates reprsented anything normal and have no idea of the history of interest rates.

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  • Looked at in aggregate the fall in real wages since 2008 means that more needs to be borrowed for the consumption that the economy requires, although the shortfall in consumption by working-age households is made up partly by pensioners, who are better off than in 2008). But we still need to ask how much of that equity withdrawal by older people goes to help their 30-40 year-old sons and daughters in the working-age category.

    Replacing government teaching grants by allowing universities to charge students up to £9k pa tuition fees means less consumption by e.g. teachers in their 30s and 40s or reduced chances of earning enough compared with outgoings to save for a mortgage deposit or be deemed capable of making payments on a mortgage, so they may end up renting and thus have even more outgoings. (£44k is the average debt on graduation.)

    (It must be said, though, that to a large extent replacing government teaching grants with government student loans is just shuffling government money around – almost 75% of graduates are forecast to be unable to pay back in full, with an average of £30k written off for such cases after 30 years – Institute for Fiscal Studies Report R93.)

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