Interest rates going up soon...
Discussion
The bad debt is still mostly out there so any recovery or rate rises are not going to really take us back to where we were.
Maybe a recovery from recession into standing still, with a back-drop of milder inflation over the next 5-10 years as the bad debt is further eroded over time.
I still think a proper big crash in 2008/2009 would have been better. We'd have been 5 years into a transparent recovery by now, instead we're all wondering when the elephant in the room might have a wobble again.
Maybe a recovery from recession into standing still, with a back-drop of milder inflation over the next 5-10 years as the bad debt is further eroded over time.
I still think a proper big crash in 2008/2009 would have been better. We'd have been 5 years into a transparent recovery by now, instead we're all wondering when the elephant in the room might have a wobble again.
Du1point8 said:
Depends if one person is on offset mortgage or not.
It depends on all sorts of things, but the point I was trying make is that if one did have 100k mortgage and 100k in the bank, one would be at the mercy of those people setting the interest rates. Given that the rates levied by lenders is always higher than those offered to investors, you would lose money as time went on. If on the other hand you used the cash to pay off the mortgage, you wouldn't be at anyone's mercy. The boost this gives to your emotional and psychological well-being is not inconsiderable. Gaspode said:
Du1point8 said:
Depends if one person is on offset mortgage or not.
It depends on all sorts of things, but the point I was trying make is that if one did have 100k mortgage and 100k in the bank, one would be at the mercy of those people setting the interest rates. Given that the rates levied by lenders is always higher than those offered to investors, you would lose money as time went on. If on the other hand you used the cash to pay off the mortgage, you wouldn't be at anyone's mercy. The boost this gives to your emotional and psychological well-being is not inconsiderable. If interest rates rise so as to make the mortgage element more expensive than the interest received on the savings, then you can pay off the mortgage.
How can there be emotional well-being in having your money in someone else's hands?!
garyhun said:
oyster said:
How can there be emotional well-being in having your money in someone else's hands?!
There is huge emotional well-being in being mortgage free.No wonder the country is in so much debt when people base their financial decisions on emotion rather than numbers.
oyster said:
If you are mortgage free with no savings or you have £100k in savings and owe £100k on a mortgage then you are in exactly the same financial position. Netted out, you owe zero.
No wonder the country is in so much debt when people base their financial decisions on emotion rather than numbers.
Nobody's disputing that overall the two situations are identical from a financial perspective. I have been in both, I am now in the mortgage-free position, and my experience is that being mortgage-free is a better feeling than having the money to pay it off but not doing so. YMMV. No wonder the country is in so much debt when people base their financial decisions on emotion rather than numbers.
oyster said:
If you are mortgage free with no savings or you have £100k in savings and owe £100k on a mortgage then you are in exactly the same financial position. Netted out, you owe zero.
No wonder the country is in so much debt when people base their financial decisions on emotion rather than numbers.
There is a scenario where you have a mortgage in one bank lets say £300k mortgage and all your savings in another £300k mortgage free. Then a crash and the bank where your savings are goes belly up - you lose £200k No wonder the country is in so much debt when people base their financial decisions on emotion rather than numbers.
Welshbeef said:
oyster said:
If you are mortgage free with no savings or you have £100k in savings and owe £100k on a mortgage then you are in exactly the same financial position. Netted out, you owe zero.
No wonder the country is in so much debt when people base their financial decisions on emotion rather than numbers.
There is a scenario where you have a mortgage in one bank lets say £300k mortgage and all your savings in another £300k mortgage free. Then a crash and the bank where your savings are goes belly up - you lose £200k No wonder the country is in so much debt when people base their financial decisions on emotion rather than numbers.
Generally, once you have split your 'cash' element across named accounts to utilise your full FSCS cover then you have to revalue cash above that level to incorporate the theoretical higher risk it is at. Ultimately this is somewhat nominal though.
But, if you've filled two people's cash to this level then you would be looking to adopt a higher risk investment for the excess in any regards.
Welshbeef said:
oyster said:
If you are mortgage free with no savings or you have £100k in savings and owe £100k on a mortgage then you are in exactly the same financial position. Netted out, you owe zero.
No wonder the country is in so much debt when people base their financial decisions on emotion rather than numbers.
There is a scenario where you have a mortgage in one bank lets say £300k mortgage and all your savings in another £300k mortgage free. Then a crash and the bank where your savings are goes belly up - you lose £200k No wonder the country is in so much debt when people base their financial decisions on emotion rather than numbers.
Welshbeef said:
oyster said:
If you are mortgage free with no savings or you have £100k in savings and owe £100k on a mortgage then you are in exactly the same financial position. Netted out, you owe zero.
No wonder the country is in so much debt when people base their financial decisions on emotion rather than numbers.
There is a scenario where you have a mortgage in one bank lets say £300k mortgage and all your savings in another £300k mortgage free. Then a crash and the bank where your savings are goes belly up - you lose £200k No wonder the country is in so much debt when people base their financial decisions on emotion rather than numbers.
markcoznottz said:
No UK citizen has ever, or will ever lose a penny in a UK current/savings account. The deposit guarantee is just a piece of window dressing. Its comical seeing otherwise savvy individuals spreading thier money between banking licences.
I'd say 99.99% the case but its not a certainty. Moot point and was tongue in cheek. oyster said:
Despite clear replies are we still debating this?!!
You are making the error of measuring individual debts and not the overall financial position of an individual.
Let's take 2 people:
Person 1 has a £100k mortgage and £100k in cash in the bank.
Person 2 has a £50k mortgage but nothing in the bank.
Who is in greater debt?
And how is that, in any way relevant to my posts ?You are making the error of measuring individual debts and not the overall financial position of an individual.
Let's take 2 people:
Person 1 has a £100k mortgage and £100k in cash in the bank.
Person 2 has a £50k mortgage but nothing in the bank.
Who is in greater debt?
May be you should be reading the replies instead of sprouting on about what you think they say ?
Crafty_ said:
oyster said:
Despite clear replies are we still debating this?!!
You are making the error of measuring individual debts and not the overall financial position of an individual.
Let's take 2 people:
Person 1 has a £100k mortgage and £100k in cash in the bank.
Person 2 has a £50k mortgage but nothing in the bank.
Who is in greater debt?
And how is that, in any way relevant to my posts ?You are making the error of measuring individual debts and not the overall financial position of an individual.
Let's take 2 people:
Person 1 has a £100k mortgage and £100k in cash in the bank.
Person 2 has a £50k mortgage but nothing in the bank.
Who is in greater debt?
May be you should be reading the replies instead of sprouting on about what you think they say ?
ks, whatever else it is. The person with zero net sent is in the better position, end of.Mr Whippy said:
The bad debt is still mostly out there so any recovery or rate rises are not going to really take us back to where we were.
Maybe a recovery from recession into standing still, with a back-drop of milder inflation over the next 5-10 years as the bad debt is further eroded over time.
I still think a proper big crash in 2008/2009 would have been better. We'd have been 5 years into a transparent recovery by now, instead we're all wondering when the elephant in the room might have a wobble again.
Indeed. A proper crash back then would have been better for all in harsh reality but it would have meant bank defaults at levels that could not have been contained or managed. Such was and is the extent of UK residential property debt as a function of UK banking balance sheets that the decimation would have been phenominal. Maybe a recovery from recession into standing still, with a back-drop of milder inflation over the next 5-10 years as the bad debt is further eroded over time.
I still think a proper big crash in 2008/2009 would have been better. We'd have been 5 years into a transparent recovery by now, instead we're all wondering when the elephant in the room might have a wobble again.
But the economy is like a forest. It needs fires to burn off the ground litter and create regeneration, letting new trees grow and old trees die. If you stop those regular small fires from happening then you build up a depth of ground litter that when it does burn it burns with a heat and intensity that kills healthy trees and the seeds that have been waiting to grow.
But what about all the FTSE 100 companies with hundreds of millions in credit at the point a bank defaults suddenly that company is bust
Say it had the cash ready to pay the VAT or Corp tax or its suppliers or its staff on the next day but bank goes pop suddenly zero to pay out the tax man loses out the staff cannot pay for anything nor can they get credit they also have no job the suppliers take a 100% loss on services or goods provided which could cause them to go pop too etc etc.
Residential mortgages who are on the brink are a small % in real terms its the businesses which would go bust overnight due to cashflow. The house of cards would collapse very very quickly and we'd have potentially been in a barter scenario.
RBS goes down
Citi Bank goes down
Barclays goes down
Lloyds goes down
UBS
Credit Swiss
Each one would then start knocking the next over until only rural banks would remain and even then they would likely have a run on them so account holders could buy some food before they have to steal.
Etc if they collapsed and were broke it would be such a game changer civil unrest would be the least of your worries.
Say it had the cash ready to pay the VAT or Corp tax or its suppliers or its staff on the next day but bank goes pop suddenly zero to pay out the tax man loses out the staff cannot pay for anything nor can they get credit they also have no job the suppliers take a 100% loss on services or goods provided which could cause them to go pop too etc etc.
Residential mortgages who are on the brink are a small % in real terms its the businesses which would go bust overnight due to cashflow. The house of cards would collapse very very quickly and we'd have potentially been in a barter scenario.
RBS goes down
Citi Bank goes down
Barclays goes down
Lloyds goes down
UBS
Credit Swiss
Each one would then start knocking the next over until only rural banks would remain and even then they would likely have a run on them so account holders could buy some food before they have to steal.
Etc if they collapsed and were broke it would be such a game changer civil unrest would be the least of your worries.
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