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What austerity?


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Restaurants, or at least the good ones, are also full. I keep asking where the recession is. Fact is, if you haven't lost your job, there isn't much of a recession at all. All you need do is eat a little less, drink a little less, turn the heating down a bit and walk instead of using the car if you are going less than a mile.

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15 years ago the average mortgage was just over three times average earnings, at ?60,000, it now stands at just over five-and-a-half times average wages, at ?140,000. :roll:

 

Need to be very careful with statistics like that. 15 years ago there was usually only one full time wage earner supporting the mortgage. These days there's usually two.

 

So it's gone from over 3 times one average wage, to about 2 3/4 times two wages. By those figures, the proportion of total household income being spent on mortgage payments may actually have gone down for some people.

 

Also, "average earnings" (of the working population as a whole) tells us nothing at all about how much mortgage holders specifically are earning. The overall average will be pulled down by:-

 

i). the increased number of early retirees living on relatively low incomes from "second careers", but having paid off their mortagages.

 

ii). the MASSIVELY increased number of students - who are of working age but earn next to nothing.

 

iii). the increased number of mothers returning to work part time rather than full time due to the high cost of child care.

 

iv). the HUGE number of Eastern Europeans working over here these days on minimum wage jobs.

 

But the most important factor over the past 2 years or so is that low interest rates have reduced many people's mortgage payments by hundred of pounds per month. And as the period of low rates has gone on, more and more people have come to the end of their fixed rate mortgage deals, dropped onto their lender's SVR, and started to benefit from this.

 

I've remortgaged this past year on to a basic variable rate product, borrowed an extra ?10K or so to fund an extension, and have STILL seen my monthly payments drop by around ?200 a month.

 

As soon as it looks like rates are set to climb by more than 2% or so I'll be straight back on to the fixed rate deals, but in the meantime I've go cash in my pocket which I can deploy as I choose.

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15 years ago the average mortgage was just over three times average earnings, at ?60,000, it now stands at just over five-and-a-half times average wages, at ?140,000. :roll:

 

Need to be very careful with statistics like that. 15 years ago there was usually only one full time wage earner supporting the mortgage. These days there's usually two

 

 

 

Not doubting it, but why say you have to be careful with statistics and then state that 15 years ago there was only one wage earner supporting the mortgage.

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Not really.

 

If they were, then repossesion rates would be problem wouldn't they Obs?

 

Mortgages have pretty much ALWAYS been assessed on the basis of around 3 1/ times one income or 2 1/2 times combined income, and we're not very far from there now.

 

If a mortgage is secured on two incomes and one person loses their job then a combination of the other income, the redundancy pay-off, maybe a payment holiday, maybe going onto interest only, and a willingness to pick up any and all work which may be available, it's very likely to be possible to avoid an arrears situation.

 

If a mortgage is secured on a single income and that person loses their job - especially if it's due to a factory closure or something and the local market is suddenly flooded with people with similar skills - then it's much more likely that a repossesion will be the end result.

 

The banks which failed (Northern Rock, Dumferline, HBoS), and all those others that needed bailing out, didn't do so due to straightforward UK mortgage customers defaulting on their loans. It was due to exposure to US securities based on largely worthless sub-prime mortgages, plus a large dose of people and their financial advisers LYING on their applications for self-certification mortgages.

 

If we're looking for scapegoats then we also need to take a look at every self-employed person in the country who inflated their stated income to get a good rate on a self-cert, and every financial adviser who signed off on having seen business accounts which cannot have ever existed.

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Well think of it this way, if there?s so much gloom and doom about maybe the travel agency?s full with people wanting a break from it all.

 

I hear that Liberia is the place to be these days so to book now text ?You Robbing Ba***rd? to 0023 14 599702

 

Bill :)

 

Sorry Bill but I had to edit it...Dizzy :wink::lol:

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Actually - Repossesions are at there highest since 1995 despite the low interest rates.

 

Last year's 46,000 repossessions were just 61% of the total recorded in the peak year of 1991, when lenders seized 75,500 homes.

 

"Highest since 1995" just means that there have been very, very few repossessions in the past 15 years.

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True, but the latest increase in reposessions (highest since 1995) has happened despite the record low interest rates that have allowed borrowers who might otherwise have been struggling, to keep up with mortgage repayments, and a string of government initiatives to help people stay in their homes.

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