Crash just started. 40% by mid 2009.

Really2

ad9898 wrote: »

Come on Steve, there is way more personal debt this time around, the very fact that rates are at 3% instead of 14% yet people are feeling it just as bad is testimony to how ridiculous things have got.

Last time we recovered from 14% interest rates and the recession. If rates went to 14% tomorrow, I would guess that nearly every mortgaged household in the country would be unable to pay their mortgage. The country would be in a state of anarchy.

I agree in part and if rates go up DD we are fobard but.

then £50,000 at 14% over 25y = £606 PM
Now £120,000 at 3.49% over 25Y = £606 PM

so to most the amount of debt is not as critical as the interest rate as you can see above both loans cost the same to service but the amout of debt is £70K more.

But on such large lending default is the problem.

chucky

Really2 wrote: »

I agree in part and if rates go up DD we aree fobard but.

then £50,000 at 14% over 25y = £606 PM
Now £120,000 at 3.49% over 25Y = £606 PM

so to most the amount of debt is not as critical as the interest rate as you can see above bot loans cost the same to service but the amoutn of debt is £70K more.

But on such large lending default is the problem.

very good example!!

it's the type of borrower and their ability to repay which is also key.

ad9898_3

Really2 wrote: »

I agree in part and if rates go up DD we aree fobard but.

then £50,000 at 14% over 25y = £606 PM
Now £120,000 at 3.49% over 25Y = £606 PM

so to most the amount of debt is not as critical as the interest rate as you can see above bot loans cost the same to service but the amoutn of debt is £70K more.

But on such large lending default is the problem.

Good point, although i think it's unlikely that we will have an average of 3% rates over the 25 years. The example you give above is very good when comparing house prices and rates, it's just the huge unsecured debt problem on top of this that we didn't have last time that is really hurting people now.

Really2

ad9898 wrote: »

Good point, although i think it's unlikely that we will have an average of 3% rates over the 25 years. The example you give above is very good when comparing house prices and rates, it's just the huge unsecured debt problem on top of this that we didn't have last time that is really hurting people now.

Agree totaly, but borrowing will be negative for a good few years now, and the low rates will give space to see that happen.
hopefully people will learn, (and then blow it all again in 15 years:D )

ad9898_3

Really2 wrote: »

Agree totaly

What !!! someone who is bullish and someone who is bearish, agreeing ??, this has to stop.:D

Really2

ad9898 wrote: »

What !!! someone who is bullish and someone who is bearish, agreeing ??, this has to stop.:D

Yes stop it, you dont know what you are on about you fool.;)

Thats better.:D

stevetodd

Dithering_Dad wrote: »

Oh dear. A bit like buying an investment property in 2007 I guess. However, you can buy more units in your tracker fund at today's value of 4083 and lower your average. Try doing that with property

I will be buying more trackers next April to average out, but will be sticking to Allshare trackers to add a bit of diversity. As I see it as a very long term investment, and I don't mind tying the cash up for a while.

Ditto property but fortunately as I bought mainly in the 90's so I am in a good position there, I do however still want to re-invest, probably late next year.

hearts

Do you juts pick figures out of the air?
I didnt read it cos I thought it was the usual nonsense. The first thing that caught my eye and stopped me immediatley was.
" As the value of the pound falls (40% drop this year already)"

This is a simple thing to check and prove. I think it's about 28% to the dollar. Can you put up some figures to show the 40% fall. and this %age was against the $ at a high it hadn't seen for many years. So a fall was always likely. Try basing your figures on the medium for the Dollar over, say a 5 or 10 year period.
Thanks

zcacmxi

hearts wrote: »

Do you juts pick figures out of the air?
I didnt read it cos I thought it was the usual nonsense. The first thing that caught my eye and stopped me immediatley was.
" As the value of the pound falls (40% drop this year already)"

This is a simple thing to check and prove. I think it's about 28% to the dollar. Can you put up some figures to show the 40% fall. and this %age was against the $ at a high it hadn't seen for many years. So a fall was always likely. Try basing your figures on the medium for the Dollar over, say a 5 or 10 year period.
Thanks

OK, Using data from www.oanda.com, over the past 5 years:

Average 1.85657
High: 2.11610
Low: 1.45560

Today £1 buys $1.18. That's 44% below the High, 36% below the Average, and 19% below the Low...

ad9898_3

zcacmxi wrote: »

OK, Using data from www.oanda.com, over the past 5 years:

Average 1.85657
High: 2.11610
Low: 1.45560

Today £1 buys $1.18. That's 44% below the High, 36% below the Average, and 19% below the Low...

Have you got mixed up with the Euro ?, the pound is at $1.52 today, 1.18 Euros to the pound.