Comments on: Labour recovering in YouGov Xmas poll

By: john t t

john t t — Thu, 03 Jan 2008 10:31:50 +0000

Depends which humans. If you seek substantial equity release loans to carry on spending more than you earn, you only have yourself to blame if things go wrong. A mortgage is “long money”. Credit cards, and overdrafts are “short” (Pity NR forgot the difference!). So, borrowing for long-term projects (DIY) is sensible, borrowing to pay off credit cards is not. Most of my mates, and family, are sensible (a fairly even mix of Tory, LibDem and Labour, probably). the people I worry about are the ones who’ve been mis-sold mortgages that they had no hope of affording.

Unemployment was a key element in the 90′s. The worst predictions for 2008 I’ve seen sugggest 100k more unemplo9yed.
The number of people in employment for the three months to October 2007 was 29.29 million, up 114,000 over the quarter and up 226,000 over the year.

So, P Banks, I agree that the proper perspective for now is that we may be in trouble, but not irretrievably so.

By: Fluffy Thoughts (EDP)

Fluffy Thoughts (EDP) — Thu, 03 Jan 2008 08:14:27 +0000

Negative-equity is a problem. Not so much in it’s own manifestation, but in how it effects leveraged debt.

If your house is worth less than your mortgage you are unlikely to seek loans based upon equity-value. If you do seek leverage the bank will probably factor the negative-value into you loan-interest rates. If you are desperate for funds you borrow on credit-cards.

If humans were rational (like economists) they would take a long-term approach. Humans however tend to live day-to-day, expecting to fall under a bus tomorrow.

By: P Banks

P Banks — Wed, 02 Jan 2008 23:23:05 +0000

I think all this fretting about mortgage rates is pathetic.
When I bought my second house in 1978, interest rates were 10%, and I budgetted that I could afford 12%. This was on a variable rate mortgage. From memory, within about a year, rates reached 17.5%, and my mortgage was taking over half my take-home pay. My wife didn’t work, and we had a child.
I don’t want to come the “old soldier”, but let’s get things in perspective.

By: John T

John T — Wed, 02 Jan 2008 21:08:22 +0000

Paul D
I think that’s probably why we now see quarter point rises and cuts rather than the half points of the 90′s.

By: Paul D

Paul D — Wed, 02 Jan 2008 20:04:56 +0000

Negative equity isn’t a massive deal, so long as you can service the mortgage and you don’t intend to move

Far more concerning is the current, unsustainable multiples of salary that people are being forced/allowed to borrow. If we assume, for simplicity’s sake, that people are borrowing six times their salary today, where they were borrowing double their salary 15 years ago, then 1 quarter point rise in interest rates has the same effect on their finances as a three-quarter point rise then. If inflation starts to rise again, there will be an awful lot of nervous home-owners