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Kickstart
The Oracle



Joined: 04 Feb 2002
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PostPosted: 20:59 - 07 Dec 2007    Post subject: Debts Reply with quote
Hi

Just caught an advert on TV saying that the average UK household debt is £8k, excluding mortgages.

Just wondering, by excluding mortgages are they conveniently excluding debts which people have shuffled onto their mortgages.

All the best

Keith
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Itchy
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Joined: 07 Apr 2005
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PostPosted: 21:01 - 07 Dec 2007    Post subject: Reply with quote
Well UK debt recently passed GDP , which is about 1 trillion , so debt was 1.1trillion

erm

1,100,000,000,000 / 60500000

£16528.92
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DOS
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Joined: 29 Jun 2006
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PostPosted: 21:09 - 07 Dec 2007    Post subject: Reply with quote
Well a lot of people remortgage to pay off other depts as it is lower interest
so by excluding the mortgage they have a lower average.
What the advert for.

Paddy.
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Itchy
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PostPosted: 21:30 - 07 Dec 2007    Post subject: Reply with quote
I recall the advert is for Dispatches Ch4 Monday 9pm


When Gordo said no more boom & bust you had to look at the minutes of what he said.

The minutes say No , more boom & bust.
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Kickstart
The Oracle



Joined: 04 Feb 2002
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PostPosted: 21:49 - 07 Dec 2007    Post subject: Reply with quote
Paddy Blake wrote:
Well a lot of people remortgage to pay off other depts as it is lower interest
so by excluding the mortgage they have a lower average.
What the advert for.


Quite. One way of making debts look a lot smaller. How many people are running round in cars / on bikes bought on the supposed equity from their houses.

All the best

Keith
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D O G
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Joined: 18 Dec 2006
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PostPosted: 22:38 - 07 Dec 2007    Post subject: Reply with quote
Kickstart wrote:
Quite. One way of making debts look a lot smaller. How many people are running round in cars / on bikes bought on the supposed equity from their houses.

All the best

Keith


Fucking loads.

Think of all the 'picture/ocean finance/greenhill finance' adverts. Secured debt is cheaper than unsecured (generally), and spread over a longer time (again, generally), so therefore more affordable. PLUS it taps straight into the wealth effect that people have because their house has appreciated significantly.

A friend of mine 'released' £25k of his equity, then bought a new car, some new furniture, did a small amount to his house, and bought a £2k pushbike which he used 3 times. Great work Rolling Eyes

There was a recent program on TV which addressed this fact - 'The Great Big Property Swindle' or summat, which included a dipshit who racked up debt on credit cards/personal loans and then re-mortgaged to pay them off. Had fuck all equity, and a stack of depreciating assets.

Still, if people are going to be fucking stupid, I'm not going to stop them, but I will laugh if the arse falls out of the whole deal.
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Itchy
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PostPosted: 12:09 - 09 Dec 2007    Post subject: Reply with quote
Damofo D.O.G. wrote:

Still, if people are going to be fucking stupid, I'm not going to stop them, but I will laugh if the arse falls out of the whole deal.


the problem is if the bottom falls out of the economy it'll affect people who are more pragmatic and don't do this equity sort of thing, with no gold left in the BoE, and taxes already as much as the people can take , there is no cushion to soften the nuclear implosion of the economy in 2008/09
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syl
World Chat Champion



Joined: 05 Dec 2005
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PostPosted: 13:01 - 09 Dec 2007    Post subject: Re: Debts Reply with quote
Kickstart wrote:
Hi

Just caught an advert on TV saying that the average UK household debt is £8k, excluding mortgages.

Just wondering, by excluding mortgages are they conveniently excluding debts which people have shuffled onto their mortgages.

All the best

Keith


Not really - IMHO a debt secured against an asset shouldn't count. You should consider assets against debts.

If people hadn't shuffled debts onto mortgages (or "released capital from their assets") then we would all be incredibly wealthy given the increase in house values - but wouldn't actually be able to afford anything.

Of course, this creates a problem if the value of houses should fall. Fortunately (for home owners) demand is still far greater then supply (as we are about 3 million houses short of what is required) so that is unlikely to happen to any great extent. There may be a small fall in prices but more than likely what we will see is a slowdown in sales and prices remaining static (slowly loosing value as they don't keep up with inflation). It would take rising unemployment coupled with high interest rates to create the conditions suitable for a crash.
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Kickstart
The Oracle



Joined: 04 Feb 2002
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PostPosted: 16:30 - 09 Dec 2007    Post subject: Re: Debts Reply with quote
dmahon wrote:
Not really - IMHO a debt secured against an asset shouldn't count. You should consider assets against debts.


Not so sure, because you could argue the same for any debts taken out to buy something which has a residual value.

dmahon wrote:
If people hadn't shuffled debts onto mortgages (or "released capital from their assets") then we would all be incredibly wealthy given the increase in house values - but wouldn't actually be able to afford anything.


Quite possibly the real situation now, just takes time to kick in.

All the best

Keith
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-Savage-
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Joined: 10 Jun 2005
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PostPosted: 16:37 - 09 Dec 2007    Post subject: Reply with quote
I'm currently in £24k of student debt and will be in about £30k by the time I get my degree.....Anyone know how to change your identity?
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owdamer
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Joined: 06 Oct 2004
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PostPosted: 18:40 - 09 Dec 2007    Post subject: Reply with quote
we remortgaged our house and took borrowed £15k to put towards our static caravan. but other than a £50k mortgage we dont have any debt at all. Everythings paid for.
Borrowing £15K for a caravan might seem foolhardy, but our house only cost us £33k in the first place and its worth about £100k at the mo so even if/when the house prices drop I cant see us getting in negative equity. We did originally look at moving house as we have no outside space here. We live in a terraced house with a shared yard. After months of looking we realised that to buy a similar house, but with a our own yard in the area we live in was going to cost us serious money. I'm sure it would have been a good investment, but with the caravan we have a holiday home in the countryside overlooking fields and a canal. We also have a set of rules which ensures the place is tidy, peacefull and unspoilt.
I dont know if you would class this as debt, but to us its the best money we ever spent!.
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Itchy
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Joined: 07 Apr 2005
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PostPosted: 18:58 - 09 Dec 2007    Post subject: Re: Debts Reply with quote
dmahon wrote:
It would take rising unemployment coupled with high interest rates to create the conditions suitable for a crash.


the perfect storm seems to be brewing though:

https://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/12/09/ccom109.xml#3

precis :

Woolworths is on the rocks its gearing has gone all wrong..

and 9 other retailers are in the same boat too.
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