One in Five could not afford food if payments rise

heathcote123

homelessskilledworker wrote: »

I am not sure how they could do this(not sure who THEY are even), but the poorest 50% of mortgage holders need to be paying 50% less than they do now, and that goes for the rental side as well.

There is some real pain happening out there right now, bear and bull arguments are becoming less important by the day, you would have to be living in Outer Mongolia or Thailand to not see what is happening in the UK today.

People are suffering badly

I live in hertfordshire, and I can't say I've noticed many people starving in the streets just yet.

LisaW123

RenovationMan wrote: »

I guess it depends how what you're classing as 'low'. If you mean BoE rates at 0.5% then I don't know anyone who thinks rates will stay that low indefinitely.

If you're classing BoE rates at 6% as 'low', then we've got a discussion on our hands.....

Well, things have changed since the 90's, when the Govt, not the BoE, set the rate and it was raised to 15% under Norman Lamont. I doubt there is much chance of the BoE raising the rate to anywhere near 6% in the foreseeable future. In mortgage terms the BoE rate is incidental, the LIBOR is the really significant factor in determining what interest borrowers pay.

michaels

Not even in Hatfield?

heathcote123 wrote: »

I live in hertfordshire, and I can't say I've noticed many people starving in the streets just yet.

vivatifosi

michaels wrote: »

Not even in Hatfield?

Or Stevenage?

michaels

And most of Hemel come to think of it and a lot of Wheathampstead :eek:

vivatifosi

Graham_Devon wrote: »

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

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.

Hang on a mo. You two aren't actually agreeing on something are you?

Loughton_Monkey

heathcote123 wrote: »

I live in hertfordshire, and I can't say I've noticed many people starving in the streets just yet.

This is because Hertfordshire is quite a civilised place, overall. There must be full employment, since they had to import some pleasant little Polish guys to set up the car wash in the Waltham Cross Homebase Car Park. Anyone starving would have the decency to do it indoors rather than in the streets....

Maybe some of them copy what I do. A technique that is 99% certain to prevent overspending....

At the start of each year, I set myself a fixed budget - which is generally last year's plus inflation. I always break it down by month and by expense heading. Of course at this detail, no one figure is ever 'exact', but the point is that I keep a constant watch on it. At the end of each month, I change all the budget figures for January to match actual, making absolutely sure that the 12 month total remains sacrosanct....

So maybe my Car Insurance is £80 over the top, and a meter reading shows that my electricity is going up £40 a month, I will have to get that £80 from some other heading/month, and the same for the extra £40 a month extra on electricity.....I cannot change the total. So some other budget must go down.

I can guarantee that this works a dream. By March or April, every year, I usually find I am 'ahead' and it becomes even more certain that I'll end the year well within budget. Even this year. We are only 4 months in, and I have had an unexpected £3K to spend on intricate bridge-work to my teeth, a £500 repair bill to the car, and my wife and I took unplanned (and unbudgeted) business class flights to Florida to see a sick lifelong friend.....

I could have sat here being "devastated" and talking about a financial "disaster", but instead I have compensated for this in other ways like deferring purchase of a new computer, buying a couple of digital boxes for two of the televisions I'd planned to renew etc.

On December 31st, I will close my 2012 'accounts' not having spent a penny more than I planned.

Gin & Tonics all round....

RenovationMan

LisaW123 wrote: »

Well, things have changed since the 90's, when the Govt, not the BoE, set the rate and it was raised to 15% under Norman Lamont. I doubt there is much chance of the BoE raising the rate to anywhere near 6% in the foreseeable future. In mortgage terms the BoE rate is incidental, the LIBOR is the really significant factor in determining what interest borrowers pay.

What do you class as low mortgage rates?

MonkeyMad

Loughton_Monkey wrote: »

At the start of each year, I set myself a fixed budget - which is generally last year's plus inflation.

...SNIP...

Gin & Tonics all round....

My house also has a budget 12 months ahead - must be a primate thing.

Gins and Tonics surely?

paulmapp8306

Low interest rates to me means, as high as they can be while I can still afford the mortgage

In fact Im just buying, and I have a max spend on my mortgage. Thats been arrived at my the fact I budget to the penny - seriously. I looked at what we spend now, which included a lot of un-necessary stuff because we could. thats Sky+HD, its mobile contracts (both up soon). Its "peace of mind" insurance on PCs, Washing machines etc. Its a reasonable (for me - not for the wife) clothes budget, savings for car expenses and XMas/BDays (again quite high I feel). Even our food budget is high (£180/week for a family of 4) - we dont spend it most of the time which leaves us some slush - which Im going to have to get used to not having.

Now - I cut everything not deemed necessary (sky, insurances, mobiles etc) and cut the budgets of those things I could (food/clothes/spending/saving etc) to where I felt we would still be OK. that gave me a "maximum" cost of a mortgage. I calculated what I could borrow with that budget based on a mortgage interest rate of 7%. Now if rates go higher than that I could be in trouble (and Im guessing they will at some point) but I have a 3 year fixed deal (just starting) at 3.79% so hoping to use the savings to overpay (though Im guessing some will go on a little luxury and increasing food/fuel/utility costs).

I am out of work in a year - due to being too old for the forces, but these calculations are done on "worse case" - ie my pension and what the goverment will give me (not much - but some child tax credits and council tax relief ammounting to around £500/month) - so should the wife or me get jobs paying more than that figure after tax - well be above water even if rates go that high. I get a lump sum when i leave as well - which will sit in the bank to subsidise the mortgage if necesarry while I find work. If I get that job and dont need to subsidise - at least most of that lump if not all will be used to overpay the mortgage as well.

im being as pragmatic as I can - and the constant "what happens if" conversations with the wife is driving her nuts. Were also going in "open eyed" in that we know if we get to the 4 year point (3 years after I leave the army) and I/we still havent found the jobs that pay what we need (really not that much i dont think) or interest rates have got to a level where we cant manage, then the house goes up for sale - we have 12 months to sell and we go into rented and let the taxpayers pay the rent. i hate the thought of that on so many levels - but should the worse happen then needs must. Were "fairly" comfortable that even if we loose all our "investment" in the house (two inheritances included) at least we will have a roof over our heads and will have given it a good go. Ultimately we wont be worse off than just renting straight away, as we'd have too much savings (totalling £56k with the inheritances and the lump Id get) to get any help at that point - so what we are investing in property would be eaten up in rent anyway over that time.

Im quite scared, of the large commitment and the interest rate thing, but you have to make a choice - and we have made ours knowing pretty much all the facts, and having plans for most things I can foresee happening in the next 5 years at least. After all whats the worst that can happen? it wont actually kill me or my family if everything goes totally wrong.