Mortgage Equity Withdrawal

IveSeenTheLight

dryhat wrote: »

Many people confuse standard of living with quality of life.

They are of course distinctly different things, but one can affect the other.

Loughton_Monkey

Linton wrote: »

.....The only advantage I see of that simple definition of wealth is that it is easily measurable. I would define the wealth of a nation to lie in the well-being of its inhabitants. Its a bit difficult to measure but in my view it does provide a better guide as to what political decisions should be taken.

In your world digging more mines, creating more factories, have people work more hours is automatically desirable if it creates more "wealth". However if the majority of the population do not gain in tangibles by this by more than they lose on the intangibles then the increase in wealth as I would see it is illusory.

We see the effect in the current political arguments. The government claim that they are in the process of creating more "wealth". Yet has people's quality of life increased other than for the few very rich? I think most would see it as decreasing.

I think this is getting too "Devonish" for my liking. I start off with an ordinary post discussing the merits of "spending" and the difference between industries that create wealth and those that just shift it about. Seeming, at last, to admit I am clinically right [which I intended to be in such a post] you seem to be attaqching all connotations to it that aren't there. I say again READ MY POSTS.

I am fully aware of 'values' within society, and "quality of life", but felt no need to make any comments on them. So why assume what I think about them? Where did I say that "in my world I desire people to work in mines for longer hours....."?

Why bring politics into it? Basic economics and accounting are not particularly political issues.

Please try not to put words or feelings into my statements that don't exist. When someone raises a clinical basic point about spending, and I respond with factual consequences of different types of spending - which you seem to take ages to cotton onto, it is not constructive to behave like "Mr Muddle". I had not so far tarred you with the same brush!

CLAPTON

Let us say we have a factory that makes cars which is situated in an awkward to get get out of town location.

In order to enhance the productivity of the workers in the factory, management arranges for a hair dresser to attend the site and cut peoples hair.

Does the hair dresser contribute to the extra wealth of production of the cars or is there 'simply' a transfer of wealth from one person to another ?

Fella

Can't we call it mortgage repayment. Or something. There simply has to be a better name than negative mortgage equity withdrawal!

Loughton_Monkey

CLAPTON wrote: »

Let us say we have a factory that makes cars which is situated in an awkward to get get out of town location.

In order to enhance the productivity of the workers in the factory, management arranges for a hair dresser to attend the site and cut peoples hair.

Does the hair dresser contribute to the extra wealth of production of the cars or is there 'simply' a transfer of wealth from one person to another ?

Another 'Devonesque' response.

Are you so stupid that you cannot work that one out? 15 year olds on GCSE Economics would probably have it sussed.

You need to sharpen up a bit. To be as entertaining as Devon, firstly you must fail to understand anything that's said.

Tick VG. The above post is perfect from that perspective.

Then, you must start to pretend I said something I didn't.

2 out of 10. You should get started on this. You're well behind Linton.

Thirdly, you will need to try and muddle what you have said and pretend you meant something different. Pretend you understood basic economics all along. Maybe say something like wealth must be measurable, but actually it's 'well being', which is totally unmeasurable.

Finally, bring politics into it. Especially HTB.

CLAPTON

Loughton_Monkey wrote: »

Another 'Devonesque' response.

Are you so stupid that you cannot work that one out? 15 year olds on GCSE Economics would probably have it sussed.

You need to sharpen up a bit. To be as entertaining as Devon, firstly you must fail to understand anything that's said.

Tick VG. The above post is perfect from that perspective.

Then, you must start to pretend I said something I didn't.

2 out of 10. You should get started on this. You're well behind Linton.

Thirdly, you will need to try and muddle what you have said and pretend you meant something different. Pretend you understood basic economics all along. Maybe say something like wealth must be measurable, but actually it's 'well being', which is totally unmeasurable.

Finally, bring politics into it. Especially HTB.

15 years olds don't do economics

no idea what VG is

I made no reference what so ever to yourself

I've made no reference to 'well being'

But as it seems impossible to sensibly discuss the contribution that service sector makes to the economy I'll leave things as they are.

Kennyboy66

Thrugelmir wrote: »

Most likely reflects the switch from interest only to capital mortgages. Increasing numbers of interest only mortgages are coming to maturity, average currently £55k.
No visible signs that borrowers are overpaying significantly either.

Agree that borrowers aren't overpaying significantly.

Except you can't have it both ways.

You can't claim the numbers up to 2008 support your view of the !!!!less borrowing against their houses to squander it on cheap trinkets.

I thought this had been done to death, but the large MEW numbers during the boom years was not all about people squandering money, but more down to the fact that there were much more housing chain transactions. Perhaps at the most 25% was 'further advances', ie taking on extra debt against an existing property. I would guess at least 1/2 of this would have been for home improvements (extensions etc), leaving even less for debt consolidation and squandering.

http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/qb110205.pdf


"The net effect of a chain of housing transactions is typically a large equity withdrawal"

wotsthat

Kennyboy66 wrote: »

Agree that borrowers aren't overpaying significantly.

Except you can't have it both ways.

You can't claim the numbers up to 2008 support your view of the !!!!less borrowing against their houses to squander it on cheap trinkets.

Something I've asked about before. Positive MEW used to 'prove' that a big party was being funded (to which invitations were limited) but negative mew isn't evidence that the party costs are being repaid.

As MEW and housing transactions have been highly correlated (at least since 1978) according to BoE (p129 of your link) it seems difficult to prove anything other that as transactions/ prices increase MEW will trend with them.

The only thing that seems clear is that in times of negative MEW the collective householder is improving their LTV and vice versa.

I don't think there ever was a party.

Loughton_Monkey

wotsthat wrote: »

Something I've asked about before. Positive MEW used to 'prove' that a big party was being funded (to which invitations were limited) but negative mew isn't evidence that the party costs are being repaid.

As MEW and housing transactions have been highly correlated (at least since 1978) according to BoE (p129 of your link) it seems difficult to prove anything other that as transactions/ prices increase MEW will trend with them.

The only thing that seems clear is that in times of negative MEW the collective householder is improving their LTV and vice versa.

I don't think there ever was a party.

Like anything, it's probably a mixture. Within the complete HEW figures [the half about taking equity out] must be some in the categories:

1. People living on the edge of income, wanting more, recognising there's significant equity in the house, so re-mortgaging to give another few £thousand to squander...

2. Similar to above, but have been missing payments. Maybe banks have allowed a one-off remortgage to straighten up the account and give the borrower a last chance.

3. More 'considered' remortgages, where perhaps mum & dad want to help little Wayne put down a deposit so decide to remortgage back up from 50% LTV to 65% or whatever. This does not specifically add to HEW, but lowers it from the alternative of little Wayne injecting his own cash into the deposit.

But mostly, it would be people who move and decide to take £20K or whatever out to use tarting up the new house. This wouldn't be picked up in BOE's figures as improvements.

I've moved house 6 times, and in every case I have taken a lump sum out. Usually for spending on the new house, sometimes new furniture.

As a general rule, I think the 'party brigade' are more than happy funding it firstly by simply not saving, or not even contributing to the company matched pension scheme. After that, they resort to credit cards. Some really go to town and splash out on Wonga. Mercs are better than Fords, because they're more expensive innit? Same with loans. Wonga are more expensive, so they must be good!

observingthedebate

We have recently deleveraged significantly (of course base on currently, I believe, inflated house prices) but also increased our mortgage debt significantly, if that makes sense.

The rule we follow is that we keep a 3.5 income to mortgage ratio and max 50% L/V. I expect, hope, this is what everyone has done hence the reduction in MEW rates.