davegtt

about 27% of my wage is on credit cards and a 2k loan morgage is extra, including my morgage, pension, tv licence, council tax, and other bills my monthly out goings are probably around the 60-70% mark

Leslie

Trouble is, no job is totally safe any more and its all very well to take advantage of cheap borrowing at the moment, but sooner or later it will all have to be paid for, especially when the Goverment is confronted by the great big black hole which is humming along in the background. The fear is that interest rates will have to go up very considerably and that is when it will bite unfortunately. We have no real industry to fall back on any more either.

There was a lot to be said for the idea years ago, that it was much safer to wait and save up for something that you wanted. People used to appreciate their possessions much more too. They got far more joy and pride of possession.

Just a thought.

Les

Jerome

65%

That's what you get when you move to another country with an existing UK loan, then earn significantly less (lucky to be working though) and have the currency exchange rate go against you.

logiclee

Very few people realise this, the city bods need to wake up and smell the coffee. The UK's manufacturing base is dying, the government covers this up saying the economy is strong and unemployment is low. Trouble is when the financial sector goes **** up and people have little money to spend on consumer goods and leisure we will be in the total crap as there will be no industrial or manufacturing sector to kick start the economy.
This has been proven time and time again throughout the world. All big economy's have large manufacturing bases underpinning them, the UK needs to stop the rot soon, a sound economy cannot be soley based on financial and liesure sectors.

Lee

workshy_fopp

There's not that much wrong with the economy really, you've never had it so good etc
Nothing wrong with credit per se, but it's basic stupidity and evil credit companies I blame. For example my g/f took out a Frasers store card to get 10% off sale prices, bought loads of things then paid it off. 2 weeks back we got a letter to the effect of "You now have £1800 credit and did you know you can now take this out as CASH from a cash machine"
/smallprintmode on
at only 29.7% apr terms variable etc. etc.
.......... that's the problem......... she's gonna write to watchdog.... maybe....... if she can be arsed... ok probably not, but that shouldn't be allowed.

sti-04!!

TBH i dont have a lot of debt & thats including a mortgage, could easily live of my savings & extras i have put away, economy is ready for a crash & TBH i am ready for it

Outgoings from my wage is roughly 12%, 8% of helens wages, got more than enough in the bank to pay of the debt i have but then if i pay that off & live credit free for a while then when / if you need credit its not going to be available

my 2ps

Stephen

Apparition

Wasn't me !!!

JoanUK300

Scuse me, but this might be a blonde moment....

If the interest rates go up again, then the debt will increase, and we end up owing more, so the trillion that is owed goes up even further!!!!

Does that make sense or shall I go back to bed?


Joan.

TelBoy

No, the interest rate itself doesn't affect the nominal amount of debt outstanding, but it certainly increases the cost of servicing that debt.

In fact, the papers this morning are full of speculation that the Bank of England will hike 50bps (0.5%) on the 5th August as a shock measure, largely in response to this debt level and the stubbornness of house price inflation. At 5%, people would certainly have to start taking *some* sort of notice of their financial obligations. At the moment, i believe many people assume that the appreciation of their house prices will bail them out of trouble in any eventuality, come what may. It's a dangerous game to play.

Steve Whitehorn

iTrader: (13)

Just like R32

No Mortgage, No Credit Cards, No Loans, No HP.

Just Freedom and a big wedge of cash - thats me

Keep life simple. None of this debt nonsense

Steve


Have to agree with Leslies sentiments too - perhaps I am just old school

Nicci

So why can't people be patient and save for what they want? Its so much cheaper.

(saving is the reason I can't get a new car until Sept).

I get the impression that many people in debt don't think about interest rates or the total amount that they will eventually pay back for their small loan.

I must be old school too (but I am not that old).
We are the group that don't mind interest rates going up (boosts my savings).

unclebuck

"UK house prices are 30% above their long-term sustainable level, according to the National Institute of Economic and Social Research (NIESR)."

http://news.bbc.co.uk/1/hi/business/3936889.stm

Some people are going to get a real wake up call soon. Kiss that X5 and those Gucci shades bye bye lol.

UB

davegtt

How long have I been reading u type this Ok I agree but u keep saying soon but how soon the amount of times youve been saying this Ive earnt another 20k on my house (OK I havent really earnt it but if as people expect stuff like house prices falling etc its not gonna fall by dramatic extents)

TelBoy

Very true, Dave, that's why people have been spending at an increasing rate - there are LOTS of people who say "heard it all before".

But the BoE are now specifically targetting house price inflation and personal debt levels with interest rate policy, which is very different from the past five years at least (and in fact is almost uncharted territory in terms of targetting these two aspects of the economy). So the Bank can, and will, keep hiking interest rates until they see real signs of a slowdown. So to answer your question, i reckon that £20k could be off the value of your property within the next six months, if not sooner.

davegtt

really think we're gonna see that sort of drop? Im not too bothered as long as the house stays in positive equity even then I aint ar$ed cause I bought it too live in but I do agree and understand what the BoE are saying/doing but all I see is a slow down and no drop. sales on my estate stagnated for a good 6 months then all of a sudden 6 houses have sold at top whack prices in 2 weeks (the misses knows 2 of the sellers) so I feel people have been holding out and are just fed up of holding out. only yesterday I read an article on MSN homepage saying houseprices are up 2.6% in the last month biggest raise this year...

TelBoy

Their *aim* will be a slowdown. The *result*, as always, will be an over-reaction and a real drop in prices, in my opinion. If they DO manage to avoid a drop in prices, their ability to fine-tune will exceed my estimation!

unclebuck

This is the most common misconception. The values of all properties have risen by a proportionate amount, so in terms of property you are actually no better off at all – unless of course you sell up and move somewhere where property is significantly cheaper (abroad). You would also be liable for tax on these ‘profits’.

The only people that really gain from these price hikes are the lenders (as the figures show) and, yes you guessed it, the good old Government – when they reassess Council Tax charges (based on property values) next year. The Great British public is being taken on a Great Big ride, but they’re too consumed by greed to see it.

UB

imlach

People often say this, but as property values are all relative, it doesn't matter if the bands are reassessed......the council tax paid should still be the same.

imlach

...err, not if it's your primary property. No CGT payable.

davegtt

Erm if you read the whole of my post not just the selective bits you choose to read you'll see that I added (OK I havent really earnt it but if as people expect stuff like house prices falling etc its not gonna fall by dramatic extents) I know full well I aint earnt 20k in my pocket I think thats pritty obvious otherwise Id be out living it up al the time, Id have to either sell or remorgage to see any of that money and even then on a remorgage Im still paying for it.... I was mearly saying that the 20k Ive earnt on the property value in the time youve been waffling on about people are gonna get stung etc when people do eventually get stung the fact that we've seen such a hike in property values means that there isnt great odds on the values dropping below what we originally paid for the house... unless off course youve bought in the last 6 months then that might be a different matter.

I also commented I dont give two hoots as to weather my house is worth £140k or £50k, end of the day Im paying to live in MY house and at the end of the next 22 years (hopefully sooner) I'll be living in MY OWN place rent free...

Adam M

dave,

don't think he did misread your post, he said that if you realise it by selling it, your next house will have gone up 20k or more too, so in all probability whether if you realise the profit by selling, you will be worse off.

btw. even with banding, if you look at the government reports on council tax, they are looking at making substantial increases across the board.

Mine is likely to increase by £1000 a year .

Since council tax is collected and redistributed locally, why is the government sticking its oar in? Will local amenities improve in line with this massive increase in tax?

imlach

Which has nothing to do with house value increases which is what Unclebuck was trying to suggest. That is just council tax reform. The reworking of the bands because of higher house prices has no impact.

davegtt

Adam, Fair enough I see that thats also pritty obvious although my point is how many times and how long have we heard people saying dont buy now there be a crash, I bought my first house in 2001 for 50k and in 6 months it was valued at 65k, it was the beginning for the price hikes (I was lucky really) and every1 was telling my friend not to buy cause house prices will come down soon, there'll be a crash this that and te other now this month a house on the same street sold for £117k (well thats what it went in the paper for and sold in a week so it cant be far off the mark) but my point is even if we had a "crash" as such can u really see that same house loosing 75% of its value to be below what I originally paid? my friend now listened to these people thinking they know it all and is now still at home with his parents and up to his eye ***** in debt from spending on cars etc and I agree there is gonna be a big slow down and maybe even a drop as the market is at its peak but I dont think they will fall to the levels at where they was 4 years ago?

do u think differently?

imlach

Some basic steps to living a life without worrying about house prices (assuming you currently own a house)!!

1) Ensure monthly outgoings are less than monthly incomings
2) Ensure good fixed rate mortgage deal if mortgage payments are a high-% of monthly incomings
3) Reduce debt levels as much as you can
4) Forget about the value of your house, and defintely don't be tempted to unlock equity.

Quite straightforward.

Steve Whitehorn

iTrader: (13)

I think the key factor is employment.
Obviously many years ago. You took out a mortgage and inflation meant that your £50 mortgage, which felt like a massive amount at the time, slowly but surely became a smaller and smaller amount of your income.

Now the 'evil' inflation has been brought under controll. - A £1,000 a month mortgage you took out a few years back still feels like a £1,000 today and it will still be the same big outlay for years to come. In real terms it isn't going to go down in value by very much. This coupled with a live for today consumer culture where people borrow, is fine as long as people have the income to service it. As long as there is fairly full employment - no problem.

As soon as unemployment hits - very big problem.
The way many people seem to lead their financial lives reminds me of a hamster on a wheel. The wheel dosn't slow down - they spend what they have as soon as they get it. One day the wheel will come off.

Also there are many people who wern't working during the last housing crash who now are full of optimisim - 'house prices always go up don't they'. Thats all people in their 20s and early 30s.

On the bright side we have fairly full employment in this country. So although the current situation is disaster waiting to happen there is no immediate catalyist on the horrizon to make this disaster happen (unemployment)

Best wishes
Steve

paulr

Its just a different world we live in now.Debt doesnt have the fear factor it once had.