What, like trashy property investment programmes that brainwash people into believing property only ever goes up and credit up to the eyeballs is a day-to-day norm?
I saw the programme and actually thought it was quite responsible which is more than can be said for some of the participants in the programme.
On figures out today it appears personal indebtedness is 165% of personal income which is the worse for any country in the world. So much for having a "prudent" chanceloor for the last 10 years
I have taped this to watch tonight. Did anyone see the Panorama about buy-to-let? Some serious debt being incurred - all by people who thought the value of the proprty could only go up and who were told the rent would easily cover the mortgage. Some of them hadn't even seen the places they bought. Example -
One woman - her income was £50k but she borrowed enough on a BTL mortgage to buy a row of student terraces in Nottingham which were 'valued' at £1.8 million. Couldn't rent them, now worth half that and she is going bankrupt.
Guy bought a £300k house in Leeds (LS6 - not a great area) without seeing it - showed him coming out of an estate agents with a valuation of £140k.
Girl in London - bought a £300k new build Barrats (?)flat. Most of others in block were BTL, so ended up with lots of dodgy neighbours. Flat now worth under £200k. I felt sorry for her.
Most of the deals were done through a property company and seemed to involve false valuations to mortage lenders and false declarations to the Land Registry - the company paid the deposit for the buyer, who then in effect had a 100% mortgage, not an 80% one which is what the lender believed.
Very sobering viewing, though the investors had not done their homework and were taken in by the hype over BTL 'guaranteed' profits in my opinion.
I thought the debt side of the program was more or less true to form in as much there are people out there who lack discipline and will-power when it comes to obtaining money on easy credit. They will have major problems in repayments but in any society where easy credit is available you will have problem people such as these depicted last night. They only have themselves to blame....noone else. Sure the Banks can take some of the blame and they do but as shown last night they are tightening up on who they lend to. Neither a debtor or a borrower be! Quotation by Mr McCawber I think. Mel.
"Neither a borrower nor a lender be" is from Hamlet - it's the father's advice to his son just about to leave home. Mr Micawber said "Annual income £20, annual expenditure £20 nought and six, result misery"
I agree that afforability is your own responsibility, but I do think it was irresponsible of the banks to start lending 5x salary etc. - this and the buy to let boom has fueled the ridiculous house prices increases of recent years. My house has 'gone up' about £1200 a month since I bought it 15 years ago -crazy.
I have no sympathy with the irresposible buyers on this programme. If they had made money on the deals they would have been the first to brag.Buying without seeing was stupid and madness. There might not have even been a building there! Had the valuers visited the property or was this another famous drive by?. Mortgage Companies and valuers bear some of the blame for being lazy and not inspecting properties,this is a lesson for everyone not to rely on just a valuation by a drive by or price comparison, have your own survey its the biggest purchase you'll ever make. The programme was not really about repossessions( I have sympathy for anyone in that situstion who is genuinely not at fault)but about gross stupidity.
What the country needs for long term low prices is for people to lose interest in houses. Unfortunately I see few signs of that. Things are certainly quiet, the rise has gone on too long and repossessions are certainly on the increase. Sadly, at the first sign of a bright spring day couples cluster around the EAs window wanting that extra bedroom, nicer garden, bigger lounge. I want my rectory in the country and that means...will you all please stop being interested in houses!
Some of the BTL people on Panorama were scammed - a number of valuers had been arrested it said. They had been seriously misled about the value of the properties. I agree though, although caught up in a greedy frenzy of BTL hype, they were mad to buy without viewing.
I watched R,R,R, yesterday - interesting, though I did feel sorry for the family losing their home. I didn't feel sorry for the short bloke who was massively in debt, yet had a Range Rover, big house, and owned racehorses. He really didn't care and had no regrets. I really couldn't sleep at night if I had a £23k overdraft. Similarly, the girl who was a 'model' and had £40k(?) of credit card debt - mostly clothes and living in the fashion to which she felt she should be accustomed. If you spend it, you should pay it back - but I guess they will get IVA's or go bankrupt and start up again later.
I agreed with the point made in the program though that the goverment has encouraged cheap credit as a way of keeping the economy going. As long as there is the 'feel good factor' and people have money to spend (even if it's not their's)then we tend to be happy and ignore the long-term consequences.
I saw a woman on Tv recently parade some credit cards on which she owed around £40.000 and she spoke about it with a smirk on her face like it was something to be proud of.Alot of people in debt are just careless and irresponsible and for them I have no sympathy.As for house prices crashing,come the next interest rate cut in May and the sun on our backs again(we hope)I think they will start to slowly climb again.
PFLUSK in 1992 I had around 40 repossessions on my books today I have just 1!!!!!! one lonely little repo big deal! 5.25 base rate is dirt cheap in the grand scheme of things Property is affordable we are not America we will pull throught this media concocted CRASH
"The greatest trick the Devil played, was convincing us all that he did not exist"
It is interesting to hear you say that, as in the R,R,R prgram it showed a northwest auction house rep saying that the number of repo's in the auction was double what it had been, and in today's Times there was news of house repo's going up 30% and reaching an eight year high. I do think the credit crunch is going to bite this time and lenders are going to be more cautious, but if that slows the growth in house prices then it's in everyone's long term interest.
Immy, want to tell us whats the difference between a huge £200,000 loan at 4% (typical today) and a £50,000 loan at 16% (typical of early 90's)? There is no difference, as the repayments are the same.
There IS no difference! Its not only the rate that matters, its the total loan you have against it! We, as a nation, are overextended to the hilt. Fact remains, once money gets tighter (which it has begun to) the lower rate is going to bite us much much harder, as the BOE have much less room to manoever. So in many ways, we are far worse off that what we were in the 90's!
Anyone that doesnt see the enormous recession that is about to befatt the UK needs their head feeling. We may not be there yet, but the writing is on the wall. Rate cuts (most of which havent even been passed on by the banks) wont stop the slide once it starts, as the banks wont have the money to lend!
Gimmie, absolutely not. Why would I wish that on anyone? wishing that on friends, family, colleagues, decent hard-working people would be nothing short of sick and utterly selfish. However I am aware that I am just as unable as you to change the way things are on the grand scale... However, that doesnt mean I am going to bury my head in the sand and pretend that things are alright when things, imo, are far from alright.
Every man, woman and child in this country has around £20K debt. of course, some equity is attatched to that (secured lending) but around £7k per person isnt (unsecured). Thats quite a significant proportion of GDP thats being gobbled up by the relatively small proportion of the population that are productive GDP-wise. money is being generated, but is being swallowed up in repayment of our credit. Not a good scenario, and one that is getting worse. Who do I blame? The blame in my opinion, quite fairly lands on the doorstep of No. 10 for the past 15 years (both Labour and Conservative). You dont get anything in this world for nothing, yet our nation has gone down the lane of ever deminishing returns (industry in decline, made-up GDP making money from nothing other than central banks printing 14% more cash per annum, lost skills etc) whilst we have been led to expect our quality of life to improve, hence the "feel good factor". Government could have "saved for a rainy day", prevented asset bubbles in areas such as housing by stricter controls (In Germany for example, if you sell on your property within 5 years of purchase, you are levvied a very punative rate of capital gains tax). IRs have been far too low for far too long, perhaps to avoid a recession back in 2001 which would have been far less severe and would have allowed a more gentle deflation of inflated asset classes. Yet no, we saved our problems for tomorrow. Well, unfortunately "tomorrow" has arrived. I don't like that fact any more than you do, but I am not going to pretend as if its not going to happen because it suits me.
I must have a word with my 2 and 4 yr olds about what they've been out spending on while mummy thinks they're tucked up in bed.