Chronically sick nation determined to learn nothing

Really2

Thrugelmir wrote: »

But net borrowing is still increasing.......

Not true for personal debt.

http://www.creditaction.org.uk/

Personal debt July = £1459bn
Personal debt August = £1458bn

lemonjelly

Harry_Powell wrote: »

Surely a lot of the debt is mortgage related, where the debt is often more than covered by the value of the asset (i.e. the house). There are not very many people who can afford to buy a house outright, so they have to either rent forever or get a mortgage. It's hardly reckless spending, especially if they have saved up a decent deposit or have a large amount of equity in their houses, and especially if their monthly mortgage payments are well within their means.

We've never had such a large proportion of owner occupiers in this country, so no wonder the amount of debt has gone up proportionally. I'd be more interested in data on unsecured loans, and whether these are increasing/decreasing in the current climate. This would be a far better indicator on people's spending/overspending habbits than to include necessary and unavoidable debt such as mortgages.

I'm afraid not.

Yes home ownership has increased, however proportionally, unsecured debt has rocketed of the scale. (I think Econo also said this).

In example, in 1982 I believe there were 2 or 3 credit cards available on the market.

Nowadays? Upwards of 2400 different ones. Add on store cards and the like. Access to credit is now significant (or was!;))

For 10-15 years the economy has been built on unsustainable consumer borrowing. Wierdly (for me), it appears to have been many service industries which have expanded. It has now got to the stage (finally IMO) that a consensus has appeared that the level of consumer borrowing needs to be wound in somewhat.

Organisations like CAB, CCCS etc are going to see a massive increase in demand for their services over the next 2 years. Many people have, because of the access to credit, been continually "robbing peter to pay paul" in order to maintain essential bills. Because of spending levels and commitments made, stuff like rent, council tax and the like has been whacked on the credit card. When that is maxed out, get another.

Many who have done this will have to face up to their difficulties as they'll not be able to secure credit as they have done previously. I'm remain to be convinced that the end of the banking write-downs has ended. I think many families are going to have to make some very tough decisions in the next 2 years. Especially if their income has suddenly fallen.

Time to take responsibility...

lemonjelly

Really2 wrote: »

Not true for personal debt.

http://www.creditaction.org.uk/

Personal debt July = £1459bn
Personal debt August = £1458bn

I'd argue that this is due to the restricted availability of credit, not because the populace as a whole is frantically paying off what they can. I believe a portion are reducing frantically, but a small portion.

Really2

lemonjelly wrote: »

I'd argue that this is due to the restricted availability of credit, not because the populace as a whole is frantically paying off what they can. I believe a portion are reducing frantically, but a small portion.

I would say it relates to the £8bn a 1/4 mortgage holders are paying off in overpayments.

But then look how much is being sucked back out. sort of goes against the common view on here that only mortgage holders are up to their eyes.

It looks like people are up to their eyes and they are just as likely to be renting etc.

Thrugelmir

Really2 wrote: »

Not true for personal debt.

http://www.creditaction.org.uk/

Personal debt July = £1459bn
Personal debt August = £1458bn

Thanks. A useful pointer.

Though do wonder if there is currently a shift of capital around the markets.

Building societies suffered a net loss of funds for the second month running in July, according to figures released by the Building Societies Association yesterday.
Savers withdrew pounds 325m net - pounds 11m up on the previous month's losses. But the outflow was not as great as some had predicted.

http://www.independent.co.uk/news/business/societies-see-net-outflow-in-july-1542580.html

Like lots of things at the moment. More data is required to see whether trends are temporary. Personally I believe more people are waking up to their personal financial situations and taking corrective action.

lemonjelly

Really2 wrote: »

I would say it relates to the £8bn a 1/4 mortgage holders are paying off in overpayments.

But then look how much is being sucked back out. sort of goes against the common view on here that only mortgage holders are up to their eyes.

It looks like people are up to their eyes and they are just as likely to be renting etc.

I agree. In fact, to an extent, rented sector are in a more difficult situation.

For a number of reasons, I'd argue that many renters (NB not all!) don't have the level of financial literacy the OO's have. They haven't had the level of involvement with financial products, don't necessarily have or access all the financial products OO's do, and possibly have a lesser level of financials skills/acumen compared to most OO's.

A lot of renters are perhaps one or two steps back from the financial services industry, and this slightly reduced acumen affects how they deal with providers of financial services, and also their own finances.

I have met many renters who's budgeting skills are second to none, they know where every last penny is (usually because they have to!) However, I frequently find, if they are a couple, it is only ever one of the couple who is like this. The other "hasn't a clue" & "leaves that to the wife/husband/partner".

However there are also many renters, who because of their lesser involvement with financial services through their lives who as they grow experience real difficulties in coping with their levels of personal debt.

lemonjelly

Thrugelmir wrote: »

http://www.independent.co.uk/news/business/societies-see-net-outflow-in-july-1542580.html

Like lots of things at the moment. More data is required to see whether trends are temporary. Personally I believe more people are waking up to their personal financial situations and taking corrective action.

Possibly, but I've yet to see evidence that it is a majority of people acting like this.

I wonder if there are also others out there engaging in their own crisis management?

HAMISH_MCTAVISH

econo wrote: »

It appears that until there is an actual monumental shift in attitude and we get a savings rate up at 6% or more rather than the 2ish % it is now, this recession will drag on and on and things on the manufacturing side will not improve much.

Actually, if our savings rate did go to 6%, it would guarantee this recession dragged on and on. Consumer spending is a vital part of the recovery.

Thrugelmir

lemonjelly wrote: »

Possibly, but I've yet to see evidence that it is a majority of people acting like this.

I wonder if there are also others out there engaging in their own crisi management?

There is the silent majority. Change can be subtle and progressive. Cutting back on expenditure doesn't neccessarily have to be drastic. The failure of the coffee chains is a good example of a change in spending patterns.

Really2

Thrugelmir wrote: »

T

http://www.independent.co.uk/news/business/societies-see-net-outflow-in-july-1542580.html

Like lots of things at the moment. More data is required to see whether trends are temporary. Personally I believe more people are waking up to their personal financial situations and taking corrective action.

Graham will have a melt down at this but I wonder how much the car scrapage scheme as contributed to this?

From what we had on here the other day your average purchaser was 45+ that most probably ties in with your average larger saver also.