Mortgage Arrears

[Fittster]

The Greek story is a universal tale… It will soon be played by the UK…and then it will be the US.

Let us summarize: Innocent fellows are seduced by debt. They fall in love with deficits. Debt proves to be an evil temptress. Our heroes are ruined.

Isn’t the story more or less the same in Britain and America too?

And now the pound is falling. It dropped below $1.50 on Tuesday. Instead of being a refuge against the troubled euro, investors are fleeing the English currency. Why? They figure that what happened to Greece could also happen to England. Britain’s budget deficit – at 12% of GDP – is almost the same as Greece’s, twice as big as the European average.

“If you really want a fiscal problem, look at the UK,” said Mark Schofield, a fixed-income strategist at Citigroup.

Not only does the government owe a lot of money, so do ordinary citizens. The overall level of debt is the second highest in the world, according to a Mckinsey study – right on the heels of Japan.

The falling pound makes it more dangerous to lend money to Britain. Investors have to worry not only about a default…but about a loss due to currency decline. This should push up the cost of financing Britain’s deficits, putting the nation in the same fix as the Greeks. Like Greece, Britain needs foreign lenders to fund its deficits. And like Greece, it will be forced to promise austerity measures, if lenders balk.

“This is a ticking time bomb,” said Nick Hopkinson of Property Portfolio Rescue, a company that assists overleveraged homeowners. “There are over 400,000 people who are in arrears with their mortgage rates the cheapest they have ever been. When rates increase, a lot of people will be tipped over the edge.”

“If rates go up, it will be a very dangerous situation for me… It might lead me to consider bankruptcy,” said Sheridan King, a UK sales manager. “We are just struggling to get by with all this debt,” he added. “It’s time the government got its house in order.”

http://dailyreckoning.com/global-budget-deficits-a...

[Bullett]

Fittster said:

“If rates go up, it will be a very dangerous situation for me… It might lead me to consider bankruptcy,” said Sheridan King, a UK sales manager. “We are just struggling to get by with all this debt,” he added. “It’s time the government got its house in order.”

Sorry, you borrowed more money than you could pay back and that's the Government/Evil bankers fault?

[Fittster]

Bullett said:

Fittster said:

“If rates go up, it will be a very dangerous situation for me… It might lead me to consider bankruptcy,” said Sheridan King, a UK sales manager. “We are just struggling to get by with all this debt,” he added. “It’s time the government got its house in order.”

Sorry, you borrowed more money than you could pay back and that's the Government/Evil bankers fault?

If you're Gordon Brown and borrowed more money than you could afford it's all our problem.

[Mermaid]

Fittster said:

The Greek story is a universal tale… It will soon be played by the UK…and then it will be the US.

Let us summarize: Innocent fellows are seduced by debt. They fall in love with deficits. Debt proves to be an evil temptress. Our heroes are ruined.

Isn’t the story more or less the same in Britain and America too?

The best way to solve the problem is for a man from Mars to some down and clear everyone's debts using his Mars Cheque book.

Failing that, how about a really austere period for a while?

[Dunk76]

Bullett said:

Fittster said:

“If rates go up, it will be a very dangerous situation for me… It might lead me to consider bankruptcy,” said Sheridan King, a UK sales manager. “We are just struggling to get by with all this debt,” he added. “It’s time the government got its house in order.”

Sorry, you borrowed more money than you could pay back and that's the Government/Evil bankers fault?

bks

My mortgage is seven years old, and the affordability calculation I did was based on my outgoings when petrol was 70p per litre, bread was 70p a loaf, and my overall weekly food shop for a family of four was less than £30.

I also figured I could take an interest rate hike of up to 7% base rate before things started getting uncomfortable. Move on seven years, I could now probably swallow a 0.5% rate rise, but would need to knock something else on the head.

Inflation is what is going to catch people out, not interest rates...

Unfortunately, with things like iPods on the inflation index, the Governments fudging of figures means most firms have been awarding 1-2% payrises in the last decade, not the 15% that real cost of living inflation's been running at.

[Fittster]

Mermaid said:

Fittster said:

The Greek story is a universal tale… It will soon be played by the UK…and then it will be the US.

Let us summarize: Innocent fellows are seduced by debt. They fall in love with deficits. Debt proves to be an evil temptress. Our heroes are ruined.

Isn’t the story more or less the same in Britain and America too?

The best way to solve the problem is for a man from Mars to some down and clear everyone's debts using his Mars Cheque book.

Failing that, how about a really austere period for a while?

Massive inflation is an easier way of clearing debt. Good job the Bank of England can't actually hit their 2% target.

[Mermaid]

Fittster said:

Mermaid said:

Fittster said:

The Greek story is a universal tale… It will soon be played by the UK…and then it will be the US.

Let us summarize: Innocent fellows are seduced by debt. They fall in love with deficits. Debt proves to be an evil temptress. Our heroes are ruined.

Isn’t the story more or less the same in Britain and America too?

The best way to solve the problem is for a man from Mars to some down and clear everyone's debts using his Mars Cheque book.

Failing that, how about a really austere period for a while?

Massive inflation is an easier way of clearing debt. Good job the Bank of England can't actually hit their 2% target.

Sure, but what would happen to interest rates?

Was it in the late 80's or early 90's that mortgage rates were like 15%, just imagine we had that now. So does that imply the level of all debt since then has sky rocketed?

[rich1231]

Dunk76 said:

Bullett said:

Fittster said:

“If rates go up, it will be a very dangerous situation for me… It might lead me to consider bankruptcy,” said Sheridan King, a UK sales manager. “We are just struggling to get by with all this debt,” he added. “It’s time the government got its house in order.”

Sorry, you borrowed more money than you could pay back and that's the Government/Evil bankers fault?

bks

My mortgage is seven years old, and the affordability calculation I did was based on my outgoings when petrol was 70p per litre, bread was 70p a loaf, and my overall weekly food shop for a family of four was less than £30.

I also figured I could take an interest rate hike of up to 7% base rate before things started getting uncomfortable. Move on seven years, I could now probably swallow a 0.5% rate rise, but would need to knock something else on the head.

Inflation is what is going to catch people out, not interest rates...

Unfortunately, with things like iPods on the inflation index, the Governments fudging of figures means most firms have been awarding 1-2% payrises in the last decade, not the 15% that real cost of living inflation's been running at.

Inflation erodes debt by the way.
Best way of reducing debt for you would to ride out a period of decent inflation. The real value of your debt is then reduced.

[oyster]

rich1231 said:

Dunk76 said:

Bullett said:

Fittster said:

“If rates go up, it will be a very dangerous situation for me… It might lead me to consider bankruptcy,” said Sheridan King, a UK sales manager. “We are just struggling to get by with all this debt,” he added. “It’s time the government got its house in order.”

Sorry, you borrowed more money than you could pay back and that's the Government/Evil bankers fault?

bks

My mortgage is seven years old, and the affordability calculation I did was based on my outgoings when petrol was 70p per litre, bread was 70p a loaf, and my overall weekly food shop for a family of four was less than £30.

I also figured I could take an interest rate hike of up to 7% base rate before things started getting uncomfortable. Move on seven years, I could now probably swallow a 0.5% rate rise, but would need to knock something else on the head.

Inflation is what is going to catch people out, not interest rates...

Unfortunately, with things like iPods on the inflation index, the Governments fudging of figures means most firms have been awarding 1-2% payrises in the last decade, not the 15% that real cost of living inflation's been running at.

Inflation erodes debt by the way.
Best way of reducing debt for you would to ride out a period of decent inflation. The real value of your debt is then reduced.

Only IF wages follow inflation.

[Dunk76]

rich1231 said:

Dunk76 said:

Bullett said:

Fittster said:

“If rates go up, it will be a very dangerous situation for me… It might lead me to consider bankruptcy,” said Sheridan King, a UK sales manager. “We are just struggling to get by with all this debt,” he added. “It’s time the government got its house in order.”

Sorry, you borrowed more money than you could pay back and that's the Government/Evil bankers fault?

bks

My mortgage is seven years old, and the affordability calculation I did was based on my outgoings when petrol was 70p per litre, bread was 70p a loaf, and my overall weekly food shop for a family of four was less than £30.

I also figured I could take an interest rate hike of up to 7% base rate before things started getting uncomfortable. Move on seven years, I could now probably swallow a 0.5% rate rise, but would need to knock something else on the head.

Inflation is what is going to catch people out, not interest rates...

Unfortunately, with things like iPods on the inflation index, the Governments fudging of figures means most firms have been awarding 1-2% payrises in the last decade, not the 15% that real cost of living inflation's been running at.

Inflation erodes debt by the way.
Best way of reducing debt for you would to ride out a period of decent inflation. The real value of your debt is then reduced.

Indeed it is, but my ability to pay the damn thing every month is also eroded because it's now £75 a tank of fuel, not £45 and a loaf of Bread is £1.30.

[Fittster]

Mermaid said:

Fittster said:

Mermaid said:

Fittster said:

The Greek story is a universal tale… It will soon be played by the UK…and then it will be the US.

Let us summarize: Innocent fellows are seduced by debt. They fall in love with deficits. Debt proves to be an evil temptress. Our heroes are ruined.

Isn’t the story more or less the same in Britain and America too?

The best way to solve the problem is for a man from Mars to some down and clear everyone's debts using his Mars Cheque book.

Failing that, how about a really austere period for a while?

Massive inflation is an easier way of clearing debt. Good job the Bank of England can't actually hit their 2% target.

Sure, but what would happen to interest rates?

Not much with the current governor of the Bank of England and the dubious ONS. The UK is going to inflate away massive public and private sector debt by hook or by crook.

[Soovy]

Dunk76 said:

rich1231 said:

Dunk76 said:

Bullett said:

Fittster said:

“If rates go up, it will be a very dangerous situation for me… It might lead me to consider bankruptcy,” said Sheridan King, a UK sales manager. “We are just struggling to get by with all this debt,” he added. “It’s time the government got its house in order.”

Sorry, you borrowed more money than you could pay back and that's the Government/Evil bankers fault?

bks

My mortgage is seven years old, and the affordability calculation I did was based on my outgoings when petrol was 70p per litre, bread was 70p a loaf, and my overall weekly food shop for a family of four was less than £30.

I also figured I could take an interest rate hike of up to 7% base rate before things started getting uncomfortable. Move on seven years, I could now probably swallow a 0.5% rate rise, but would need to knock something else on the head.

Inflation is what is going to catch people out, not interest rates...

Unfortunately, with things like iPods on the inflation index, the Governments fudging of figures means most firms have been awarding 1-2% payrises in the last decade, not the 15% that real cost of living inflation's been running at.

Inflation erodes debt by the way.
Best way of reducing debt for you would to ride out a period of decent inflation. The real value of your debt is then reduced.

Indeed it is, but my ability to pay the damn thing every month is also eroded because it's now £75 a tank of fuel, not £45 and a loaf of Bread is £1.30.

Sorry but I think you just overstretched yourself.

How I enjoy dinner parties these days with the people who used to brag about how their house "earns more than they do".

[Dunk76]

Soovy said:

Sorry but I think you just overstretched yourself.

How I enjoy dinner parties these days with the people who used to brag about how their house "earns more than they do".

Don't be such a twonk Soovs.

My point being is that the cost of living has risen so much that the Interest rate increase buffer zone I (and I presume many other people) built into mortgage calculations 7 years ago has been eroded to virtually nil.

It's got nothing to do with your strange sense of self-righteousness because you didn't borrow against equity (neither did I, as it happens).

It's a curious Daily Wail thing that everyone on PH assumes that people have blindly exceeded their means if they can't make mortgage payments.

[Soovy]

Dunk76 said:

Soovy said:

Sorry but I think you just overstretched yourself.

How I enjoy dinner parties these days with the people who used to brag about how their house "earns more than they do".

Don't be such a twonk Soovs.

My point being is that the cost of living has risen so much that the Interest rate increase buffer zone I (and I presume many other people) built into mortgage calculations 7 years ago has been eroded to virtually nil.

It's got nothing to do with your strange sense of self-righteousness because you didn't borrow against equity (neither did I, as it happens).

It's a curious Daily Wail thing that everyone on PH assumes that people have blindly exceeded their means if they can't make mortgage payments.

OK I am sorry for yanking your chain.

[Fittster]

Dunk76 said:

Soovy said:

Sorry but I think you just overstretched yourself.

How I enjoy dinner parties these days with the people who used to brag about how their house "earns more than they do".

Don't be such a twonk Soovs.

My point being is that the cost of living has risen so much that the Interest rate increase buffer zone I (and I presume many other people) built into mortgage calculations 7 years ago has been eroded to virtually nil.

It's got nothing to do with your strange sense of self-righteousness because you didn't borrow against equity (neither did I, as it happens).

It's a curious Daily Wail thing that everyone on PH assumes that people have blindly exceeded their means if they can't make mortgage payments.

I really don't understand your point. Inflation might mean that your calculations for the cost of a can of beans has been thrown off but the real value of the loan you have taken out to buy a property has also been reduced.

For debtors (i.e. the government and people with mortgages) inflation is a good thing, savers on the other hand are screwed.

[Dunk76]

Fittster said:

Dunk76 said:

Soovy said:

Sorry but I think you just overstretched yourself.

How I enjoy dinner parties these days with the people who used to brag about how their house "earns more than they do".

Don't be such a twonk Soovs.

My point being is that the cost of living has risen so much that the Interest rate increase buffer zone I (and I presume many other people) built into mortgage calculations 7 years ago has been eroded to virtually nil.

It's got nothing to do with your strange sense of self-righteousness because you didn't borrow against equity (neither did I, as it happens).

It's a curious Daily Wail thing that everyone on PH assumes that people have blindly exceeded their means if they can't make mortgage payments.

I really don't understand your point. Inflation might mean that your calculations for the cost of a can of beans has been thrown off but the real value of the loan you have taken out to buy a property has also been reduced.

For debtors (i.e. the government and people with mortgages) inflation is a good thing, savers on the other hand are screwed.

It would be an eroded value if I had the money to pay it back in full.

I still have to cough up a certain amount of money each month from my pay... a lump of cash which has increasingly high demands from other areas which I cannot avoid... like not starving to death, bloody council tax, etc etc.

[Nick_F]

Dunk76 said:

Fittster said:

Dunk76 said:

Soovy said:

Sorry but I think you just overstretched yourself.

How I enjoy dinner parties these days with the people who used to brag about how their house "earns more than they do".

Don't be such a twonk Soovs.

My point being is that the cost of living has risen so much that the Interest rate increase buffer zone I (and I presume many other people) built into mortgage calculations 7 years ago has been eroded to virtually nil.

It's got nothing to do with your strange sense of self-righteousness because you didn't borrow against equity (neither did I, as it happens).

It's a curious Daily Wail thing that everyone on PH assumes that people have blindly exceeded their means if they can't make mortgage payments.

I really don't understand your point. Inflation might mean that your calculations for the cost of a can of beans has been thrown off but the real value of the loan you have taken out to buy a property has also been reduced.

For debtors (i.e. the government and people with mortgages) inflation is a good thing, savers on the other hand are screwed.

It would be an eroded value if I had the money to pay it back in full.

I still have to cough up a certain amount of money each month from my pay... a lump of cash which has increasingly high demands from other areas which I cannot avoid... like not starving to death, bloody council tax, etc etc.

Ditto.

Inflation erodes earnings, not debt.

Only earnings inflation erodes debt; and the relationship between earnings inflation and cost-of-living inflation has not been a good one over the past few years.

I don't spend money on electrical goods, new cars or Chinese plastic; the effective rate of inflation on the things on which I do spend money - insurance, fuel, food, car servicing, builders, child care and such like is three or four times RPI/CPI-based earnings inflation.

[Engineer1]

Precisely inflation as measured by the government is bks, the basket is fudged, if I take home £1200 a month but am now spending £70 a week on fuel instead of £30, and £100 on food instead of £50 then the mortgage becomes awkward to pay and potentially the odds and sods I put on the credit card to smooth a month don't get paid off in fact the credit card balance is more likely to go up as the spare cash has vanished.

[fido]

Nick_F said:

Inflation erodes earnings, not debt.

I'll go one further - inflation erodes government debt - especially if johnny foreigner owns alot of the debt. Problem is they'll be weary of lending to you next time .. or if you're in the EU - the Germans will want to reclaim some of your holiday islands

[jules_s]

The FTSE rate looks st atm doesn't it?