CPI hits 4.4pct

julieq

How does keeping interest rates low regardless of circumstances (which was the contention) line the MPC's pockets exactly?

Generali

julieq wrote: »

How does keeping interest rates low regardless of circumstances (which was the contention) line the MPC's pockets exactly?

Perhaps they are long bank shares and shorting pawnbrokers.

ILW

julieq wrote: »

Enlighten me. Why would the MPC want to conspire to keep interest rates low exactly?

They may all have low rate tracker mortgages.

ILW

wolvoman wrote: »

How do you define 'overborrowed'?

125% mortgages?
Mortgages on grossly inflated incomes?
£50k credit card debt on a salary of £30k?

Need any more examples?

Generali

ILW wrote: »

125% mortgages?
Mortgages on grossly inflated incomes?
£50k credit card debt on a salary of £30k?

Need any more examples?

Is this a big problem? I don't have the numbers to hand but personal insolvency being at relatively normal levels at the end of a very bad recession makese think most people aren't having huge problems servicing their debts. In fact the real level of debt is falling in the UK.

Mortgage rates may be relatively low but most personal loans are at a fixed rate and credit card rates haven't fallen AFAIAA.

julieq

We went here a few days ago.

125% lending isn't intrinsically wrong, or else unsecured lending would be intrinsically wrong. A 125% mortgage can be looked at as a 90% secured loan and a 35% unsecured loan at a low interest rate. By looking at default rates you can price the risk and insure collectively against default. As default rates are low it's clear that these products were not badly judged or managed.

Mortgage lending didn't exceed 3.5x salary during the boom, so lending was not against grossly inflated incomes.

And credit card debt is so expensive, it's profitable even with defaults. Most people repay, and most people manage their credit card debt sensibly. Don't get distracted by newspaper headlines and worst cases.

DervProf

julieq wrote: »

Mortgage lending didn't exceed 3.5x salary during the boom, so lending was not against grossly inflated incomes.

I take it that's an average figure, based on joint mortgages ?

DervProf

ILW wrote: »

They may all have low rate tracker mortgages.

I'd be suprised if none of them had a BTL or two.

Just sayin'.

DervProf

Generali wrote: »

Is this a big problem? I don't have the numbers to hand but personal insolvency being at relatively normal levels at the end of a very bad recession makese think most people aren't having huge problems servicing their debts. In fact the real level of debt is falling in the UK.

Mortgage rates may be relatively low but most personal loans are at a fixed rate and credit card rates haven't fallen AFAIAA.

I don't know much about the subject, but there does seem to have been a proliferation of companies advertising that they can write off a fair proportion of your debts. How much they write off, and how effective they are, I do not know, but they seem to have sprung up in the last few years.

ManAtHome

Generali wrote: »

In fact the real level of debt is falling in the UK.

Or maybe going up. From Credit Action stats, personal debt is up 0.7% y-o-y. Yes, a lot less than during the binge, but when inflation is higher than wage increases, even 'no change' is an increase in debt.

Credit Action link http://www.creditaction.org.uk/helpful-resources/debt-statistics.html - latest stats are Jan 2011, but overall debt has been edging up from around £1.4 trillion for the last couple of years.