Mortgage Equity Withdrawal

Fella

CLAPTON wrote: »

15 years olds don't do economics

That's changed then, I did Economics GCE when I was 15.

Fella

Kennyboy66 wrote: »

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.

This is purely anecdotal stuff but I know lots & lots of people who MEWed and not one of them used the money for home improvements. Sometimes it was to buy a new car or cars, sometimes it was for holidays, in most cases it was to pay off credit card debt or other loans.

chucky

Fella wrote: »

This is purely anecdotal stuff but I know lots & lots of people who MEWed and not one of them used the money for home improvements. Sometimes it was to buy a new car or cars, sometimes it was for holidays, in most cases it was to pay off credit card debt or other loans.

Consolidating debt to pay it back at a cheaper interest over a longer period of time is a good thing that these figures sometimes hide.

Kennyboy66

Loughton_Monkey wrote: »

Curiously housing, works of art etc. probably appreciate rather than depreciate, making house building one of the best methods by which any society increases its wealth.

Why aren't Spain and Ireland really, really wealthy then ?

After all, they have spent 15 years building houses - surely the best method of creating wealth, no ?

Why didn't Stalinism or Maoism work, were they were both obsessed with maximising units of production (and often obsessed with producing steel if we are talking wheelbarrows).

People need food, shelter and other basics, but there is not much point in a massive TV if you have nothing to watch on it.

There's also not much point in having a ridiculously cheap agricultural food system, if you don't have a sophisticated logistics system to get it from the farm (anywhere) to the customers door.

Kennyboy66

chucky wrote: »

Consolidating debt to pay it back at a cheaper interest over a longer period of time is a good thing that these figures sometimes hide.

I would disagree.

Essentially a mortgage matches the payments for using something (a house) over the life of the house. It matches long term debt with long term use.

Likewise a 3 or 4 year car loan, to buy a car matches medium term use with medium term payments.

However, consolidating debt, is generally spreading current (or past spending) over many future years - its insane - no one in their right mind would set out to do this.
I can see, it is the least worst option once someone is in a hole, as long as they stop digging.

Loughton_Monkey

Kennyboy66 wrote: »

Why aren't Spain and Ireland really, really wealthy then ?

After all, they have spent 15 years building houses - surely the best method of creating wealth, no ?

Can't you work it out?

I'll give you a hint. The word 'probably' was applied to appreciation in UK. The word 'probably' has a degree of uncertainty. Maybe you should look at the fact that Spanish and Irish houses have depreciated by 50% or more.

You could also (if you could work it out) take a slightly different view. Look at it as a two stage process. When they built all these houses, they sold straight away at fat bubble prices.

So (a) Building houses did add an embarrasingly large wealth to their nations. Then (b) A bubble burst, and the vast bulk of their wealth depreciated as well.

If the wealth didn't exist, it could not have depreciated.

grizzly1911

Kennyboy66 wrote: »

However, consolidating debt, is generally spreading current (or past spending) over many future years - its insane - no one in their right mind would set out to do this.
I can see, it is the least worst option once someone is in a hole, as long as they stop digging.

A bit like Western governments - they can't stop digging though.

Linton

Loughton_Monkey wrote: »

Can't you work it out?

I'll give you a hint. The word 'probably' was applied to appreciation in UK. The word 'probably' has a degree of uncertainty. Maybe you should look at the fact that Spanish and Irish houses have depreciated by 50% or more.

You could also (if you could work it out) take a slightly different view. Look at it as a two stage process. When they built all these houses, they sold straight away at fat bubble prices.

So (a) Building houses did add an embarrasingly large wealth to their nations. Then (b) A bubble burst, and the vast bulk of their wealth depreciated as well.

If the wealth didn't exist, it could not have depreciated.

Or the "wealth" was an illusion. What the accountants thought was wealth wasnt in any real sense.

If you, as you seem to do, regard the wealth generated by manufacturing as being encapsulated in the manufactured item and that this is different to services where wealth cannot be encapsulated it seems to me you have a real problem with housing (or works of art). After the point of manufacture these can increase or decrease in value. A decrease one could understand as real depreciation ie wearing out, but an increase? Where does the extra value come from? Clearly not from the hard work of the manufacturer who is long gone.

chucky

Kennyboy66 wrote: »

I would disagree.

Essentially a mortgage matches the payments for using something (a house) over the life of the house. It matches long term debt with long term use.

Likewise a 3 or 4 year car loan, to buy a car matches medium term use with medium term payments.

However, consolidating debt, is generally spreading current (or past spending) over many future years - its insane - no one in their right mind would set out to do this.
I can see, it is the least worst option once someone is in a hole, as long as they stop digging.

That's the reality.

The perception of consolidating debt and paying it for longer does not make sense in absolute terms. You will probably end up paying more interest than the original loan.

Thrugelmir

Loughton_Monkey wrote: »

When they built all these houses, they sold straight away at fat bubble prices.

From my visits to Spain and Ireland very apparent that they didn't. A vast amount of semi completed development. Let alone the ghost settlements.

Banks all over Europe were falling over themselves to lend to property developers. An issue that's far from resolved even now.