Halifax Jan +0.6% MoM -1.8% YoY

IveSeenTheLight

shortchanged wrote: »

Bit of a misquote there by me I'm afraid. I suppose I meant disposable income is declining. Yes wages may still be rising, but tax increases and inflation are meaning more people are feeling the squeeze on household income and expenditure.

http://www.independent.co.uk/news/uk/home-news/average-household-income-down-16-2248131.html

In the same timeframe, we've also seen a reduction in mortgage repayments as a percentage of income.

What would be interesting is to see a breakdown of the expenditure.
With mortgage repayments as a percentage of income below the long term norm, the question that should be asked is where in the budget will the allowance come from when mortgage rates rise?

Generali

IveSeenTheLight wrote: »

What would be interesting is to see a breakdown of the expenditure.

This simple version (link) opens as a .pdf.

2011 weights for the RPI:

Food......118
Catering...47
Alcohol.....60
Tobacco...28
Housing...238
Fuel and light...42
Household goods..65
Household services..63
Clothing and footwear..44
Motoring...137
Fares & other travel..20
Leisure goods.....36
Leisure services..64

They will correspond pretty well with how the average person in the UK spends his or her money. The above is out of 1,000 so the average person spends £2.80 on tobacco of every £1,000 they spend in total (that's spend not earn). A smoker will most likely spend a lot more than that and a non-smoker a lot less (probably £0) but Mr Average spends £2.80.

Here is a really good explanation of the RPI & CPI.

IveSeenTheLight

Generali wrote: »

This simple version (link) opens as a .pdf.

2011 weights for the RPI:

Food......118
Catering...47
Alcohol.....60
Tobacco...28
Housing...238
Fuel and light...42
Household goods..65
Household services..63
Clothing and footwear..44
Motoring...137
Fares & other travel..20
Leisure goods.....36
Leisure services..64

They will correspond pretty well with how the average person in the UK spends his or her money. The above is out of 1,000 so the average person spends £2.80 on tobacco of every £1,000 they spend in total (that's spend not earn). A smoker will most likely spend a lot more than that and a non-smoker a lot less (probably £0) but Mr Average spends £2.80.

Here is a really good explanation of the RPI & CPI.

Very Good.
Now, forgetting about the percentages for a second, what would most people priorities lie in order of necessities

For me: -
Food......118
Housing...238
Fuel and light...42
Household services..63 (Not sure what this is for given Fuel and Light are above)
Motoring...137
Clothing and footwear..44
Leisure goods.....36
Leisure services..64
Catering...47
Fares & other travel..20 (Motoring is above)
Household goods..65
Alcohol.....60
Tobacco...28

Taking clothing downwards, that's 36.4% that could be reallocated to higher priority on the list.

Graham_Devon

ISTL, would I be right in thinking that you are suggesting people could cut back on other expenditure to meet mortgage payments?

If this is the case, considering we have already cut back as a nation, which is causing problems in the economy, surely cutting back more would mean the folding of more business, lack of growth, rising unemployment?

I'm not sure your theory would really work that well. It may keep the house, but would make the economy worse than it is today, providing more problems for the housing market.

We are just, as a nation, over indebted.

Generali

Fares and other travel is:
Passenger Transport by Railway:
UK rail fares, London transport fares, Euro Tunnel fares, Other underground/metro fares, Passenger Transport by Road:
Bus fares, Minicab fares, Coach fares, Taxi fares, Charge for home removals
Passenger Transport by Air:
Air fares
Passenger Transport by Sea and Inland Waterway, Various ferry and sea fares

Household services covers things like cleaning products, telephone and postal charges and domestic help (e.g. a cleaner).

IveSeenTheLight

Graham_Devon wrote: »

ISTL, would I be right in thinking that you are suggesting people could cut back on other expenditure to meet mortgage payments?

this is about prioritisation of necessities.
higher priorities does include mortgage payments, but also food, lighting, heating etc

Graham_Devon wrote: »

If this is the case, considering we have already cut back as a nation, which is causing problems in the economy, surely cutting back more would mean the folding of more business, lack of growth, rising unemployment?

I'm not sure your theory would really work that well. It may keep the house, but would make the economy worse than it is today, providing more problems for the housing market.

We are just, as a nation, over indebted.

Although individually we make up the nation, we can only affect our own personal wealth / debt.
It's natural that as individuals, we will look after no 1 first and if that means cutting back on cigs, alcohol, takeaways, new shoes, leisure, etc etc etc then that is what general society would do.

Your creating the justification of why rates are low and why until the economy is on a stonger foothold, rates won't rise.

The discussion is about how people will be affected when rates rise, yet your putting a compelling argument that they will remain low for some time and after the economy recovered

Graham_Devon wrote: »

We are just, as a nation, over indebted.

At some point, we are going to have to allocate funds for repaying that debt, thus affecting our disposable income.

IveSeenTheLight

Graham_Devon wrote: »

I'm not sure your theory would really work that well. It may keep the house, but would make the economy worse than it is today, providing more problems for the housing market.

Take the scenario then.
You get a 3% increase in April, however Food, Utilities and Rates have increased by 5%.*

*I know basic percentages are meaningless unless the figures they are applied to are known, but lets take the above £1000 income increases to £1050, whilst the : -
Food......118 >>>>> 123.9
Housing...238 >>>>> 249.9
Fuel and light...42 >>>> 44.1
Let's assume the rest match your 3% increase.

Where are you going to allocate the funds from?

Graham_Devon

IveSeenTheLight wrote: »

The discussion is about how people will be affected when rates rise, yet your putting a compelling argument that they will remain low for some time and after the economy recovered

You are putting words in mouthes here.

I have merely picked up on what you have said, and suggested that it would be damaging to the economy. I think you have seen exactly what I mean, so have turned around and suggested I'm arguing for low rates.

I could quite as easily turn around and suggest you are creating a compelling argument for destruction of the economy in your bid for low interest rates.

IveSeenTheLight

Graham_Devon wrote: »

You are putting words in mouthes here.

Absolutely not. I'm discussing a topic of which the focus has moved onto when rates rise.

Graham_Devon wrote: »

I have merely picked up on what you have said, and suggested that it would be damaging to the economy. I think you have seen exactly what I mean, so have turned around and suggested I'm arguing for low rates.

I'm not disagreeing with you that lower disposable income could contribute to a worsening of the economy.
This is why rates are being kept at record lows at present.

Of course our discussion was exploring the hypothesis of whether people could afford rises when they happen.

I therefore wanted to consider what would be the natural impact.

I'm sure you agree that housing, food, light and heating would weigh higher in priority than other expediture. You've certainly not disagreed.

Graham_Devon wrote: »

I could quite as easily turn around and suggest you are creating a compelling argument for destruction of the economy in your bid for low interest rates.

Hardly.....
If anything, I'm justifying why rates are low and are unlikely to rise until the economy is in a stronger position.

shortchanged_2

IveSeenTheLight wrote: »

In the same timeframe, we've also seen a reduction in mortgage repayments as a percentage of income.

Well surely this is due to the very low interest rates that many people now have on their mortgage deals. And this won't last forever.