Bank of England warns of tougher curbs on mortgage lending

DervProf

mbga9pgf wrote: »

Yes, but the debt has to be paid back

Exactly. If the debt was built up to invest in something that provides a return, then it can be a good thing. Money borrowed just to have a good time today is not such a good idea.

And what I keep wondering is this. Every time I hear the debate on cutbacks in public spending to reduce the defecit, labour keep telling us that it doesn`t need to be so much and so soon. They claim that they would have halved the defecit within 4 years (I think). Now, is that halving the total debt, or just the amount they were adding to the debt ? I think it`s the latter.

DervProf

chucky wrote: »

you're not wrong at all and it isn't a bad approach.

where i was going was that times have changed and this economic crisis is showing us that if we want to make the most of our savings - bank savings accounts may not be the future.

we will have to look at alternatives.

Such as ?

I`ll guess that "property" might be one possible answer. Fine, but wasn`t it property that kicked off the current financial crisis. And if it wasn`t property itself, wasn`t it complex financial instruments (not "boring" savings accounts) that caused the mess ?

chucky

DervProf wrote: »

Such as ?

I`ll guess that "property" might be one possible answer. Fine, but wasn`t it property that kicked off the current financial crisis. And if it wasn`t property itself, wasn`t it complex financial instruments (not "boring" savings accounts) that caused the mess ?

let's not mention property - it's not the best example, but is an option.

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i'm not saying they're better than savings just saying that in current times we have to look at the alternatives (which carry more risk) that provide a better return.

ILW

lisyloo wrote: »

Twenty years ago most teenagers did not have a car (I was near that age 20 years ago).
We didn't have mobile phones, sat nav, satelitte TV, expensive TVs, gym membership.
2nd cars weren't that common.
Foreign holidays weren't that common either.

Now I would agree with you that most of those things aren't necessary enriching, but the point is that people did not have the disposable income to spend.
We have probably been encouraged by our capitalist society to work harder to spend on junk like a plasma TV rather than doing more enriching things (like voluntary work) I would agree, but people definitely have different standards now than 20 years ago.

Whether our lives are better - probably not.
They were probably "best" in austere times when people helped each other out, had a sense of camaraderie, dug their gardens and were fittter and healthier.
So it depends on how you value things doesn't it.

But I would definitely say more disposable income.
My niece, nephew had cars at 17 depsite being in lowly paid jobs.
That was very uncommon 20 years ago.

Think you may have got a little caught up in the hype, most of the things you mention were not even invented 20 or 30 years ago.
When I was a teenager (30 years ago) myself and all my friends all had cars. They did tend to be a little old and rubbish and cost about 50 quid but I truly cannot see that the standard of living is that much better now despite the amount of debt.

DervProf

chucky wrote: »

let's not mention property - it's not the best example, but is an option.

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i'm not saying they're better than savings just saying that in current times we have to look at the alternatives (which carry more risk) that provide a better return.

So, after a (serious) financial crisis arguably caused by "posh" gambling, we are advised to enter the casino, or watch as our hard earned slowly wastes away.

Not saying your advice is wrong, just making a point (and not backtracking :rotfl:). Sorry, I couldn`t help that, it`s grim outside and I fancied a little fun.

michaels

I agree - we should have been more like Germany, consumed less than we produced and saved more. And the same applies to the USA, Eire, Greece, Spain etc. In fact if every country had run a trade surplus we would never have got in to this predicament in the first place...;)

ILW wrote: »

As a long term strategy, I would suggest that if as a country we had encouraged people to save rather than run up debt over the last decade or so, then the financial crisis we are now in would not have been nearly as bad.

RenovationMan

chucky wrote: »

let's not mention property - it's not the best example, but is an option.

Stocks & Shares
Bonds
Index linked savings

i'm not saying they're better than savings just saying that in current times we have to look at the alternatives (which carry more risk) that provide a better return.

Why not mention property? If you were interested in BTL, now would be a good time to do it if you had a decent deposit and could secure a good mortgage rate. If the stories are true about mortgages becoming harder to acquire, then a lot of people will be renting for a long time. You could get a better return on your investment via rent than you would get via bank interest.

Alternatively, people could invest in their homes. Either buying a house in a better area or buying a larger house. This is what I have done and I'm already receiving a payback on my investment in the form of quality of life. In 25 years I will feel it via a tax free pot of cash released from downsizing.

chucky

RenovationMan wrote: »

Why not mention property?

because it doesn't fit peoples morality...

i rememeber discussing with Dervpro the morals of property investing when we were in year 3 at school and he was against it then so didn't want him to backtrack now

RenovationMan

chucky wrote: »

because it doesn't fit peoples morality...

i rememeber discussing with Dervpro the morals of property investing when we were in year 3 at school and he was against it then so didn't want him to backtrack now

Yes, investing in property does seem to get people's goat on here for some reason. As far as I'm concerned it's as relevent as any other investment.

I choose not to invest in shares in (or work for) Tobacco companies. That's my personal choice, but I dont force my opinions on others or make them feel bad for having less moral fibre than me.

mbga9pgf

Smoking could be seen as a public service. Seeing as its mainly doleites that do it.