One in Five could not afford food if payments rise

alleycat`

Caveat_Mortgagor wrote: »

They didnt need to save, the pile of bricks was supposed to magically make them rich.

Your point seems to be to accept that diverting such significant sums of the mortgagors income towards housing is an acceptable misallocation because it would have been possible for some of this money to have been wasted if spent in other ways. Conveniently this ignores the fact that much of it could have been spent productively. ie Better to guarantee huge percentages of incomes are diverted to housing than to give the mortgagors a free choice to spend wisely or waste when spent in another industry.

Its not the strongest position to argue!

I take the premise that people have bought into housing making you richer (rather than somewhere to live).

However, I'm suggesting the mortgagors have misused the money that was free'd up due to the interest rate fall that could have been used to do things like save for a rainy day or pay down debt.

Instead they have spent that protection on ?

I have my suspicions and i doubt it had anything to do with
a) making the economy better by shopping or
b) anything to do with improving the country.

On a side note, that is slightly off topic:-

I work opposite two pubs in the centre of town that have a fairly large queue at the door for 10am opening every single day (not the staff).

How is that possible when 20% of the population are "starving to death" as the news would have it.

wotsthat

Graham_Devon wrote: »

It's the constant ebbing away at income that's crippling. I'm certainly spending more on living (car / home costs) in total than I was 5 years ago, and that's WITH lower rates, which I have benefitted from.

Just my car insurance is over double what it was 3 years ago. The car is also a lower insurance group as it's been changed 2 times since.

May not seem much, but after paying £35 a month for a high end, high speed car, paying £68 a month for a dog of a family car isn't my idea of fun. No accidents, no claims, no points (infact thinking about it, I also had 6 points on the licence 3 years ago...all gone now).

Could it be possible that you had a great deal 3 years ago and a poor one now?

I've just looked at my spending 2011 vs. 2007 after making an effort to reduce spending which has involved behaviour changes as well as chasing better deals. The amount I take out of cashpoints is down 18%, Christmas spending down 8%, takeaway spending down 50%. My total utility spend (gas, electric, water, phone) is only up by 3% although insurance costs have risen by 18% in the same period.

Total interest payments down by 84%! Total spending on holidays up by 90%!

Graham_Devon

wotsthat wrote: »

Could it be possible that you had a great deal 3 years ago and a poor one now?

I've just looked at my spending 2011 vs. 2007 after making an effort to reduce spending which has involved behaviour changes as well as chasing better deals. The amount I take out of cashpoints is down 18%, Christmas spending down 8%, takeaway spending down 50%. My total utility spend (gas, electric, water, phone) is only up by 3% although insurance costs have risen by 18% in the same period.

Total interest payments down by 84%! Total spending on holidays up by 90%!

What about fuel?

I don't really class christimas, take away and cash point withdrawls as car/home running costs to be honest!

I did have a goo deal, but it's widely known car insurance has doubled, and in some cases trebled. Council tax keeps going up too, even though it's frozen, as they only freeze the council bit. The parish blighters seem to get yearly 20% increases.

ILW

Putting something away in the good times to help when the going gets tough is so last century.
Even BoE seem to want to punish anyone that did.

Emy1501

Would be pretty amazed if people could not find the extra money when push comes to shove as I'm sure they could get rid of Sky, broadband, I Phone etc.

Issue will come though if rates rise by 2%-3% over the next few years and people are not able to change their habits.

People have got used to rates as they are now without the thought that its likely they will be a reasonable amount higher in the next few years. Its been suggested that HSBC are basing affordability on mortgage rates of 6-8% so that shows where some lenders think rates could be in the next few years.

LisaW123

When I bought my first home I factored in the possibility of interest rates getting up to 10%. I could remember friends of my parents being badly affected by very high interest rates (up to 15% at one point I believe) in the early 1990s. I can't understand why people would think interest rates would stay so low indefinitely. Whilst there is little doubt that banks have lent irresponsibly, people also seem to have borrowed without much thought as to how they would manage if circumstances change, as circumstances invariably do.

Graham_Devon

LisaW123 wrote: »

When I bought my first home I factored in the possibility of interest rates getting up to 10%. I could remember friends of my parents being badly affected by very high interest rates (up to 15% at one point I believe) in the early 1990s. I can't understand why people would think interest rates would stay so low indefinitely. Whilst there is little doubt that banks have lent irresponsibly, people also seem to have borrowed without much thought as to how they would manage if circumstances change, as circumstances invariably do.

Yep, but this is all classed as doom mongering. Apparently.

chucky

LisaW123 wrote: »

When I bought my first home I factored in the possibility of interest rates getting up to 10%. I could remember friends of my parents being badly affected by very high interest rates (up to 15% at one point I believe) in the early 1990s. I can't understand why people would think interest rates would stay so low indefinitely. Whilst there is little doubt that banks have lent irresponsibly, people also seem to have borrowed without much thought as to how they would manage if circumstances change, as circumstances invariably do.

Too right, I say the same thing to savers who thought that interest rates were going to stay at previous levels for ever.

LisaW123

chucky wrote: »

Too right, I say the same thing to savers who thought that interest rates were going to stay at previous levels for ever.

Indeed, you can't have it all ways.

wotsthat

Graham_Devon wrote: »

What about fuel?

I don't really class christimas, take away and cash point withdrawls as car/home running costs to be honest!

I did have a goo deal, but it's widely known car insurance has doubled, and in some cases trebled. Council tax keeps going up too, even though it's frozen, as they only freeze the council bit. The parish blighters seem to get yearly 20% increases.

I get fuel from my employer.:) My wife though uses less fuel than 2007 as she changed jobs to work closer to home and has changed cars too. Fuel costs were a consideration in both decisions.

The other stuff was just to show that savings really are possible that would help all these people that have a choice between food or mortgage. My utility bills are flat from 5 years ago and I'm no colder, dirtier, and don't read by candlelight. Maybe Which should point people to MSE.

Wife's car insurance 2012 is up by 46% vs 2009. Sounds a bit scary until you realise that's equivalent to only £110/ year extra for a car in a slightly higher insurance group. It's unwelcome but in absolute terms it's not that much money.