UK household debt versus assets

Going4TheDream

MrRee wrote: »

That's very true ..... but, the Oldies were living through real hardship well before the internet, ipads, iphones, plasma TV's and holidays abroad.

Oldies are very capable of waiting for something ..... hell, I would wait until Xmas for the chance to get an Orange in my sack - along with a lump of coal and a toffee apple!!

yeah I know, my old dad bless him , long since gone was born in the early 30's, but he used to tell me all about how growing up in the war and rationing, seemed a life time of difference to me growing up in the 70's

MrRee_2

I will probably die in my house - makes no odds to me, my wealth doesn't come from my house but from working every working day since the age of 14 ..... I'll thank you to remember that, ruggedtoast.

the_flying_pig

H, the article's author had the good grace to preface it with proper disclaimer,

"In the spirit of David Cameron's attempt to put a more positive spin on the economy, I've been taking a look at some of the underlying trends. It's not easy to be optimistic, but nor are things quite as dire as frequently portrayed."

Did you consider doing likewise?

Generali

HAMISH_MCTAVISH wrote: »

UK personal debt = 160% of income.

UK personal savings in financial assets alone are worth 450% of income.

UK housing equity is worth more than 400% of income.

Net worth per household is around 700% of income, on average.

http://www.telegraph.co.uk/finance/comment/jeremy-warner/8861014/UK-economy-moves-out-of-intensive-care.html

Hardly a crushing burden then, for the country or economy as a whole.....;)

Although it's understandable a few whiny youngsters from the "me, me, me" generation want to complain about house prices, the reality is all housing wealth is ultimately passed on to future generations and always will be unless we find a way to abolish death.

It's a very interesting point but it's worth remembering that debt needs to be serviced from income as well as being covered by assets.

A if debt is 160% of income and households can borrow at 5% then they pay 8% of income to service that debt (not pay it down, just service it). If households can borrow at 20% then they'll pay almost a third of their income just to service their debt.

I've seen interest rates at both ends of the scale in my 40 year life and I have no doubt I'll see both again.

DervProf

MrRee wrote: »

It's true, from my viewpoint, that we are hugely wealthy in the UK.

Yes, we have debts - but generally the debts are held by those who couldn't wait to get something .... the gullible and the simple in essence.

Those 'oldies' who saved before spending have made themselves wealthy by patience and not borrowing at high rates.

So the message to potential FTBers is "don't be gullible or simnple, save up and pay cash for your first home".

While I agree that racking up a huge credit card balance or taking on large personal loans is often not such a good idea, a reasonably sized mortgage is something that most of us will have to take if we want to buy a home.

And the "oldies" did have it a bit easier from what i have seen. My parents were just working class people. They still live in the only home they ever bought. My father never earned as much as the average wage, my mother worked part time or stayed at home to bring up myself and my sister. They never claimed benefits (apart from family allowance). Today they live in a house that a FTBer could never aspire to, unless they were on well above avergage income. And when I say "they", I do mean both partners.

ILW

Debt compared to illiquid assets is not a particularly useful indicator of financial health.

wotsthat

Graham_Devon wrote: »

So if my house is worth 300k, and I owe 100k on an interest only, or even repayment mortgage.

Are you saying I can just sell the house, and then I will have money, but no where to live?

This seems, well, rather stupid.

Well you could do that.

You'd have £200k to buy another house and be the best part of £400/ month better off too, probably lower council tax banding and utility costs. I think some call it downsizing.

wotsthat

ILW wrote: »

Debt compared to illiquid assets is not a particularly useful indicator of financial health.

Not as a single indicator but it is one measure of how safe the debt is. One of the first things asked if applying for a mortgage is how much of the house value is to be loaned.

Kennyboy66

HAMISH_MCTAVISH wrote: »

UK personal debt = 160% of income.

UK personal savings in financial assets alone are worth 450% of income.

UK housing equity is worth more than 400% of income.

Net worth per household is around 700% of income, on average.

A couple of problems;

1) Net worth is forecast to fall to 620% by the OBR in 2015.

2) The UK has an ageing population - in that 700% net worth figure there needs to be the means to support one or two people for at least 20 years from retirement to death.

Doesn't look so rosy now does it.

IronWolf

Assets in housing doesnt mean anything when you are talking about a country as a whole. its not like the whole country could liquidate their houses, prices would fall through the floor. Also a house isnt an asset it is a necessity to live and most are not prepared to sell it unless forced to