Another Bank of England warning on debt- Are we doomed?

[Murph7355]

kingston12 said:

...
Now inflation is starting to come back strongly in the rest of the economy as well, are they really surprised that borrowing has gone up?

It actually fell in June.

Target is 2%, currently 2.7%.

I don't see the BoE raising interest rates materially until there are a couple of successive jumps to 3%+.

It's not essential to have higher interest rates - Japan do OK, though there are cultural differences there that help. And whilst the only debt I have is my mortgage, that's big enough at present that I'm quite happy for them to be low for some time yet

The country's finances are definitely not healthy though. Government need to take a lead and cut our cloth centrally first up. Might wake a few people up.

[Wait Here Until Green Light Shows]

edh said:

Wait Here Until Green Light Shows said:

I really hope interest rates start climbing soon - it's about time those of us who have been sensible with money start seeing some benefit.
5% would be nice please.

No chance. Too many people with massive mortgages on low interest rates.

It hit 15% in the 80's and hovered around 9% for quite a while. It wasn't that long ago Building Societies were offering 5% return on savings.

Never say never.

[kingston12]

Murph7355 said:

It actually fell in June.

Target is 2%, currently 2.7%.

Indeeed, but they have benefited from years of very low inflation on everything except housing up to 2016.

Edited by kingston12 on Tuesday 25th July 11:30

[andy43]

Oakey said:

andy43 said:

Oakey said:

hyphen said:

That doesn't mean it is bonkers though - they based it on your income and ability to pay it off, not hers. Standard practice.

You're going to have to explain how you work that one out.

It is definitely bonkers. Untried and untested new customer is instantly given 4k of potential debt, based on some joint credit check that nobody normal understands anyway. Then people wonder why 'can't pay we'll take it away' could be on telly 24-7 and still not get round to film everybody.
BofE has been bleating about credit for a few years now but nobody appears to be doing anything about it...

There was no joint credit check, they know nothing about me. After being stung in the 2008 crash my credit score is 'Very poor' (seeing as I've not applied for credit again ever since then) so if they took anything to do with me into account that just makes it even more insane.

£4000 with no income
Early noughties all over again. 125% mortgage anybody?

[ellroy]

Never as far as matters in a meaningful real world though.

Govt 10 yr gilt yield is currently 1.2%.

[FN2TypeR]

Wait Here Until Green Light Shows said:

I really hope interest rates start climbing soon - it's about time those of us who have been sensible with money start seeing some benefit.
5% would be nice please.

You have no chance

On the other hand my mortgage is flying down - it will be finished years early all being well

I'm also sensible with my money so I'm quite sure why you seem to be applying some sort of catch all opinion to borrowers

All the best with your savings,

[kingston12]

Wait Here Until Green Light Shows said:

It hit 15% in the 80's and hovered around 9% for quite a while. It wasn't that long ago Building Societies were offering 5% return on savings.

Never say never.

House prices are too high to go back there, aren't they? A house that might have cost £150k in the 80s is £1m now. Paying back the interest on the 80s mortgage at 15% is actually cheaper in £ terms than paying back the much larger mortgage at 2.5% now.

Paying back the capital would have been much easier as well, although that is less relevant as it doesn't seem fashionable to do that anymore.

This Government have supported house price inflation in whatever way possible, so I can't see them intentionally crashing the market now.

I'd be surprised if we go above 2% base anytime soon.

[Oakey]

andy43 said:

£4000 with no income
Early noughties all over again. 125% mortgage anybody?

Mental isn't it? Do they just pluck these figures out of the air?

"This candidate looks promising, no income, stay at home mum, what shall we give her Bob?"

"FOURTHOUSANDPOUNDS!" *snooort* *sniff* *sniff*

[crankedup]

hyphen said:

Oakey said:

I work, my partner stays at home and looks after our son. She opened a Next account, they promptly gave her £4k of credit. fking bonkers.

That doesn't mean it is bonkers though - they based it on your income and ability to pay it off, not hers. Standard practice.

Yes, but how many High St shops offer exactly the same type of finance, and then credit cards on top, and then a personal loan + shark money. All prey on the weak willed.

[crankedup]

Wait Here Until Green Light Shows said:

I really hope interest rates start climbing soon - it's about time those of us who have been sensible with money start seeing some benefit.
5% would be nice please.

That would be nice, make a change from seeing cash savings devalue.

[menousername]

Oakey said:

I work, my partner stays at home and looks after our son. She opened a Next account, they promptly gave her £4k of credit. fking bonkers.

Im using "you" here in the third person sense, not at you directly....


if you can pay they win.

If you cannot - they either come after your house or they sell the debt to someone who will come after your house - they win.

House price growth = equity over mortgage = means of recourse probably 99% of the time thanks to low interest rates.

Any interest accruing could make it quite catastrophic for the account holder

[ellroy]

crankedup said:

That would be nice, make a change from seeing cash savings devalue.

Cash has always tended to devalue. Even in the days of 10-12% interest rates inflation was running far higher.

[hyphen]

Oakey said:

andy43 said:

Oakey said:

hyphen said:

That doesn't mean it is bonkers though - they based it on your income and ability to pay it off, not hers. Standard practice.

You're going to have to explain how you work that one out.

It is definitely bonkers. Untried and untested new customer is instantly given 4k of potential debt, based on some joint credit check that nobody normal understands anyway. Then people wonder why 'can't pay we'll take it away' could be on telly 24-7 and still not get round to film everybody.
BofE has been bleating about credit for a few years now but nobody appears to be doing anything about it...

There was no joint credit check, they know nothing about me. After being stung in the 2008 crash my credit score is 'Very poor' (seeing as I've not applied for credit again ever since then) so if they took anything to do with me into account that just makes it even more insane.

Fair enough on the last part. But it is not uncommon when lending unsecured credit to look at the partners profile even if not a joint credit check.

Any shared bills? Any shared bank accounts? joint mortgage? same address? Anything at all to link you on any database out there? or she may have been asked directly about her situation.

Basically they look at what they know to be true- the data shows that statistically the partner will x times out of 10 bail out the other one if it comes to it, hence they will lend accordingly.

[towser44]

menousername said:

Oakey said:

I work, my partner stays at home and looks after our son. She opened a Next account, they promptly gave her £4k of credit. fking bonkers.

Im using "you" here in the third person sense, not at you directly....


if you can pay they win.

If you cannot - they either come after your house or they sell the debt to someone who will come after your house - they win.

House price growth = equity over mortgage = means of recourse probably 99% of the time thanks to low interest rates.

Any interest accruing could make it quite catastrophic for the account holder

How can they come after the house, the Next credit is highly unlikely to be secured it will be unsecured debt.

[Rovinghawk]

Wait Here Until Green Light Shows said:

I really hope interest rates start climbing soon - it's about time those of us who have been sensible with money start seeing some benefit.

I've borrowed a little under £1 million that's yielding me about 8% but costing me about 4%. As I'm seeing some benefit, is that not being sensible with money? I don't see it as debt, I see it as investment.

Wait Here Until Green Light Shows said:

5% would be nice please.

Rainbow-coloured unicorn stting skittles would also be nice but equally unlikely in the next 5 years.

Interest rates are neither good nor bad- it depends what you do with them.
Also debt is only a problem if you can't service it.

Rather than bleating about low interest rates, take advantage of them. This is a truer meaning of being sensible with money.

[menousername]

towser44 said:

How can they come after the house, the Next credit is highly unlikely to be secured it will be unsecured debt.

Assuming inability to repay, and more liquid possessions not covering what is outstanding, can bankruptcy not be pursued?

[feef]

I've got a Lloyds/TSB Avios credit card account that gives me an Amex and MasterCard on the same account (£1=1avois on the Amex, £5 = 1 avoid on the MC )

I opened it to use in lieu of my debit card for all day-to-day expenses and pay it off in full every month by direct debit. It's there for the sole purpose of building my avoid points up.

When I opened it they gave me £4500 credit limit, it's now up at £8750 despite my monthly spend staying pretty much consistent since I got it, and it always being paid off in full. I'm not sure what they are getting out of it :/

[Murph7355]

crankedup said:

Wait Here Until Green Light Shows said:

I really hope interest rates start climbing soon - it's about time those of us who have been sensible with money start seeing some benefit.
5% would be nice please.

That would be nice, make a change from seeing cash savings devalue.

Highly unlikely.

Though if you want a 5%, 10% etc return, there are places that you can get it. You just have to take a bit of risk.

[crankedup]

Rovinghawk said:

Wait Here Until Green Light Shows said:

I really hope interest rates start climbing soon - it's about time those of us who have been sensible with money start seeing some benefit.

I've borrowed a little under £1 million that's yielding me about 8% but costing me about 4%. As I'm seeing some benefit, is that not being sensible with money? I don't see it as debt, I see it as investment.

Wait Here Until Green Light Shows said:

5% would be nice please.

Rainbow-coloured unicorn stting skittles would also be nice but equally unlikely in the next 5 years.

Interest rates are neither good nor bad- it depends what you do with them.
Also debt is only a problem if you can't service it.

Rather than bleating about low interest rates, take advantage of them. This is a truer meaning of being sensible with money.

Personal question which you may choose to tell me to * off. Your one million investment, would that be invested into buy to let?

[hyphen]

crankedup said:

hyphen said:

Oakey said:

I work, my partner stays at home and looks after our son. She opened a Next account, they promptly gave her £4k of credit. fking bonkers.

That doesn't mean it is bonkers though - they based it on your income and ability to pay it off, not hers. Standard practice.

Yes, but how many High St shops offer exactly the same type of finance, and then credit cards on top, and then a personal loan + shark money. All prey on the weak willed.

Exactly why they gave her £4k of credit, and why your credit company keep writing to you to tell you that they want to increase your limit.

Everyone has so much amount of credit they are statistically good for, the earlier a company gets in there and gets their portion the better, so at some point down the line, another store will decline his OH.

Weak Willed/low iQ are their bread and butter- everyone is on commission, from the bloke in the shop who helps you to fill in the application up to the CEO's and Investors of the finance providers.

The UK converted to UK PLC a long time ago, 5th biggest or so largest world economy heavily reliant on debt fuelled consumerism.