Britons inject 3.2 bln stg in housing equity in Q1 - BoE

Thrugelmir

chucky wrote: »

context = it equates to people paying back nearly 1% of the average mortgage per year if it's annualised. re-capitalise that and it shortens the mortgage term.

With around £1,200 billion outstanding in total mortgage debt. Equity of £12 billion per annum equates to .01% of total debt.

Not earth shattering !

chucky

Thrugelmir wrote: »

With around £1,200 billion outstanding in total mortgage debt. Equity of £12 billion equates to .01% not 1%.

£3.2 billion repaid divided by £11.5 million mortgages = just over £1,000 annualised.

from your numbers £1,200 billion mortgage debt divided by 11.5 million mortgages = £104k average mortgage

£1000 divided by £104k is just under 1%

have i got that horribly wrong?
i'm happy to be told i have

Thrugelmir

chucky wrote: »

have i got that horribly wrong?
i'm happy to be told i have

No. My decimal point was in the wrong place.:o

IveSeenTheLight

Generali wrote: »

The flip side of that coin is that if the best investment you can find with interest rates at 2-3% is paying down cheap debt then the economy is in a real mess!

I think we've seen enough examples of people who simply concentrate on reducing debt than understanding that they could not reduce the debt and earn more.

Reducing debt is the safe method, laid down by generations albeit not the most financially astute one.

I myself suffer from this.

I'm rapidly repaying my BTL properties.
I shouldn't do so given the tax and interest benefits, but I prefer to do so at present to lower my risk.

My goal is to be debt free and prior to that reducing the risk.

Maybe not the best policy for my ecenomic situation, but certainly not an indicator that it's in a real mess.

Thrugelmir

IveSeenTheLight wrote: »

I think we've seen enough examples of people who simply concentrate on reducing debt than understanding that they could not reduce the debt and earn more.

Reducing debt is the safe method, laid down by generations albeit not the most financially astute one.

Current situation is unique. Only those who have benefited from taking low rate trackers at the right time are winners. Plenty of others are paying over the odds on their borrowed money. Average SVR across all lenders is close to 5%. Not many investments give a guaranteed post tax return of above 5%, without a risk to capital .

chucky

Thrugelmir wrote: »

Current situation is unique. Only those who have benefited from taking low rate trackers at the right time are winners. Plenty of others are paying over the odds on their borrowed money. Average SVR across all lenders is close to 5%. Not many investments give a guaranteed post tax return of above 5%, without a risk to capital .

just taking this part - why is it different to any other time?

in general investment return is less than debt repayments - if this were not the case (in general terms) everyone would be borrowing to invest.

Generali

chucky wrote: »

just taking this part - why is it different to any other time?

in general investment return is less than debt repayments - if this were not the case (in general terms) everyone would be borrowing to invest.

Pretty much everyone does, don't they? If you buy shares (or your pension scheme does on your behalf) then you are effectively taking on debt as pretty much every listed company has debt.

Thrugelmir

chucky wrote: »

just taking this part - why is it different to any other time?

in general investment return is less than debt repayments - if this were not the case (in general terms) everyone would be borrowing to invest.

My comment was in response to,

Reducing debt is the safe method, laid down by generations albeit not the most financially astute one

Which suggested that leveraging to invest, provides a better return.

lewisa

chucky wrote: »

those people that are repaying this debt would be those that have higher interest debt than their investment rate or people who anticipate rates increasing.

Thats the reason im paying down.

I could tie up the savings for 2 years and earn about 2% more than my mortgage rate, but I just cant be arsed, Id rather just get the thing paid before Merv unleashes the beast.