Shelter has reported this morning that:
One in eleven people in Britain fear they won't be able to afford their rent or mortgage at the end of this month, according to new research from Shelter released today.
The research, based on a YouGov survey of over 4,000 British adults, shows household budgets across the country at breaking point, and suggests that millions of us will start the New Year worried about keeping our homes.
Families are the worst affected, with over 70% of rent or mortgage payers with children currently struggling or falling behind with their payments, compared to 63% of the general population.
And remember, this is before a significant number of UK households face the risk of a mortgage rate rise this year.
The average current UK mortgage rate is, apparently, about 3.4% whilst the average balance is about £96,000. No doubt many of the households facing problems have bigger loans balances than that; by definition they're not in the middle of the range. But even for those on such balances a rate rise of 1% (which is entirely plausible within 18 months) increases their annual cost £80 a month. When you can't already make ends meet that tips you over the edge. When you already can't make ends meet finding another £1,000 a year is impossible.
The biggest question that many politicians will have to face in the next year is what they will do for those who will find themselves in this situation and how they will handle the consequences. I suspect few have answers.
Broken Britain may look to be in deep trouble as 2014 progresses.
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There is no way that Carney will raise base rate for the foreseeable future. He’s already busy back-pedalling on his forward guidance policy. Proof, it it were needed, that our whole economy is distorted by the residential land market.
Have you seen this article by Jeremy Warner?
http://www.telegraph.co.uk/comment/10547281/It-is-high-time-we-raised-interest-rates-and-returned-to-normality.html
It’s grisly economically and socially
Well, the sooner it boils over the sooner we can get rid of the extremely cruel Establishment regime that’s ruled this country for centuries. I’ve been predicting civil unrest on a scale unseen since Cromwellian times for some time now, have I not? Here it comes, we see it appearing over the horizon. Hopefully from the chaos we’ll be able to establish a more universally beneficial new order.
Agreed -the crisis wasn’t faced up to in 2008 so put off. Unless there is a massive crash in housing and the split up of corrupt banking oligarchs, nothing will change. At the end of the 19th century in America anti-trust laws broke up the corporations that had become socially harmful -whay can’t we do it now?
Housing is the main disaster -but no politician will talk about it, they pretend the housing crisis is like the weather rather than a deliberate 30-year banking scam that has made the hedge-funds rich and syphoned wealth out of the broad population. No one talks honestly -the contempt i feel towards politicians of all parties is now without bounds! And Richard still thinks we should vote!
On a downday i agree. On an upday i agree. I probably need more medication like the QE ZOMBIES but alas that’s not really meant to benefit us and is reserved for the inner circle – along with the subsidized banking bonus or other taxpayer guaranteed largesse insert name as you think fit.
I can’t see this ending well. Government policy doesn’t seem to extend beyond kicking the can down the road, keeping the housing bubble going, to disguise the danger that many mortgage holders are in. When house prices fall, they will not have assets or income to meet their debt. Unlike Bill Kruse, I don’t see civil unrest, just passive resignation and an even worse depression.
What is the least bad option to get out of this mess?
One possibility would be far higher inflation, to share the pain between borrowers and lenders. What else is there? Has Labour any credible alternative to Tory economic theory?
Richard, I hope you can suggest some better answers, and more importantly get them believed.
Our families and communities can be destroyed by un and underemployment, our social and public services decimated on the altar of austerity, and the wealth producing sector of our economy sacrificed according to the dictates of “junk economics”. However this same junk economics insists on the sanctity and holiness of debt. There can only be one explanation, debt, meaning money owed by the poor to the rich must be a new deity. I seem to remember a prohibition in the bible concerning the worship of false gods. The short term solution is simple. Write off the debts in accordance with the ability to pay. If we want to keep the book keeping in order we can utilize some of the balances held in tax havens. At the end of WW2 Germany’s debts were written off. As I recall the world did not end, and the German economy has since prospered. The longer term solution is to remove the creation of credit from private hands. Credit should be a public utility. It should be available at low cost to the real economy and at no cost to vital services such as the NHS. Private institutions will not do this as they need to charge interest. The resulting debt burden because it grows at a compound rate destroys the economy. A public utility does not need to operate in this fashion. There will be a need to run the economy in “real time” (ensuring the correct information feedback loops and democratic control etc) but that is simply an exercise in applied cybernetics. That is the easy bit. The more difficult challenge will face the courageous citizen. We will now need to step up to the plate. It will involve second chamber reform, to which citizens will appoint themselves. For reasons of logistics it will be largely internet based, again an exercise in applied cybernetics. People will appoint themselves according to their passions and hence expertise. Citizens will have four roles, advocate, critic, doer and auditor. I think we already have a name for this form of government, if my memory serves me right it’s called democracy.
We forget that the UK’s first world war debt to the US was also written off in the 30s
We could get rid of a lot of debt if it were better understood a) that no loan was made in the first place and b) many can be made to go away. I’d suggest people check out Positive Money and my own humble offering Economania in the first instance and try Getoutofdebtfree and The Consumer Action Group Forums for the second. You perhaps might not like to try to rid yourself of your mortgage but credit card debts, when push approaches shove, in many cases turn out to be unenforcable. I’m holding off a major card company who’re chasing me for several grand at present. I intend to keep doing so and at the moment I’m managing it mostly on the premise that they don’t have a copy of any original credit agreement relevant to me. It’s beginning to look as if there never was one. Apart from which, they tend not to have originals anyway as they sell them on as securities. Since they’ve sold them, they can’t be produced in court and so any alleged debt can’t be enforced. That’s for old ones, where more recent agreements are concerned a mockup will sometimes suffice. There’s many a slip twixt cup and lip whatever though so whatever your circumstances I’d recommend people check out both these sites to see what can be learned. The debt collection agencies and card companies, I now understand, prosper largely because people have no idea of their rights and will swallow any old guff if it’s dressed up to look official. They have no morals whatsoever and there appears to be no law whatsoever against them telling the most blatant outright lies in pursuit of money they have no legal rights to. There’s no need to put up with this. Educate yourself and deal with your debts.
Just to be clear:
You’ve bought things using a credit card (which you still have or have used) and now are trying to use a technicality to avoid paying the CC. Company.
A bit aggressive tax avoidance some would say.
(Don’t expect this will make it through)
So what are you suggesting instead?
Perpetual servitude?
How am I avoiding paying the credit card company? I’ve been giving them real money for years in the erroneous belief they’d loaned some to me. I know better now so I’m looking for any out I can. Don’t forget, banks don’t make loans and credit card companies don’t either. The money comes into existence in our economy when I buy stuff with it, till then it exists only as an off-balance sheet liability (the term for which is contingent, La Coppola informs me). In other words before it’s spent it’s a figment in someone’s imagination. What happens with credit cards is instead of the bank creates money in the “borrower’s” account, when you make a purchase with your card it’s you who brings that money into creation in our economy as a deposit in the account of whoever you’re buying from. Talk of giving money back to the credit card company or avoiding it is entirely misleading as they never had it in the first place. The credit card company extend their power of money creation to me through the use of the card. They do this because they imagine if I believe I’ve been loaned something then I’ll believe I have to pay it back. This is money which would never have come into existence without me, so why should I give it to them? They sow credit which costs them nothing bar their paltry overheads in the hope of reaping a lot more in the form of spendable cash money. It’s just a scam to bring about wealth extraction from the main economy. It needs to be knocked on the head as it’ll bring about the collapse of society if it’s allowed to continue, and by coincidence there’s a good video by Bill Still available marking the recent sad passing of Margrit Kennedy which goes into detail on this Bill Still. It’s interesting what he says about the virtual currency called quarks. I’ve said for some years we need to create an alternative financial system to the main one but my approach has been to suggest having local councils set up local currencies and local public banking, which I still say we should do, but virtual money can similarly make mainstream finance and to some extent government irrelevant. It’s very interesting. I’m wondering whether to invest in some virtual coin mining gear but first I need to know what my leccy bills would be like using it…
Maybe people should not use their credit cards for things they don’t need. Instead of committing fraud.
I would be worried about the bad credit mark, and the bank wanting more for my mortgage payments.
You have a point about that bad credit mark. Bad marks appear on your credit reference if the banks/financiers say so and apparently it remains there whether you’re in dispute or not, as I am. This is clearly unfair. The banks/credit card companies etc can’t take you to court and get money out of you that way as they’ve happily sold on the allegedly fit and proper credit agreement you allegedly signed (so they can no longer produce it) and, I stress this, their only approach in court is to say you signed an agreement that you’d give them money. Their case is not that they loaned you money which you won’t give back plus compound interest at a ludicrous rate, presumably because they didn’t lend you any money at all, instead they extended their power of money creation to you through their credit card. they keep quiet about that bit. It’s the agreement itself which gives them an authority they clearly shouldn’t have, that and the fact that without any independent third party agreement, i.e. entirely on their say-so, they can mess up your credit record. The credit reference agencies appear to be little more than mouthpieces for the financiers in this regard, which means effectively the banks can pull any scam they like and if you object to it then no matter how justified your objection you get hit with a bad credit record. See how crooked and one-sided all this is? Shouldn’t there be independent third-party scrutiny and agreement before your credit reference can be adversely affected when you’re in dispute? The whole system’s bent and you get back at it any way you can.
1) A bank or building Society should NEVER, under any circumstances, be allowed to throw out tenants when they foreclose on a BTL property. That should be law,
2) There are a lot of firms, aware of this problem, that offer a service “we will buy your home, we’ll take on the debt, in future you’ll pay us.” Some of these firms are decent & reputable but more are not. The Govt should take on this role, there should be a scheme allowing every home-owning family to just give their property back to the Govt & just pay what they can afford in rent.
The great advantage of this idea is it allows house prices to fall to a sensible level &, unlike the massive inflation rises etc, there is NO get-out for BTL landlords. They just have to chew over the cud of their losses & cry.
It will also end up with the Govt owning an awful lot of domestic property, just as it did before the bad old days of Mrs T.
Most of your comments I agree with.
I don’t see the government or local councils owning property ever again. Either the housing associations like Guinness Trust or foreign owned.
We do as a country need to right the housing bubble issue. Its causing the recovery to be slower than necessary. Since 2004, I have been scared of the UK becoming Japan II. It appears some people either don’t notices or understands overseas countries and what can happen.
The BTL landlords need to have a recession, they are being helped by QE at the moment. Their time will come, with the rents they charge, sooner the better.
This is a land issue. Tax the land and you’d never have another house price bubble and houses (that basic human right) would become affordable.
¨These days, someone poor and on benefits is more likely to come from one of those hardworking families the government keeps telling us about¨
http://flipchartfairytales.wordpress.com/2013/12/17/the-rise-of-the-hardworking-poor/
“We do as a country need to right the housing bubble issue. Its causing the recovery to be slower than necessary. ”
This is a colossal understatement James! banks (hedge funds) have been blowing housing bubbles for the last thirty years with intent that is pure rapine! It has ans wrecking lives, destroying small businesses and part of a huge wealth transfer to people who care not a jot weather the economy prospers, indeed, it is often in their interest that it doesn’t prosper -in short, housing is an utter humanitarian disaster and will get worse. QE has turned out to be ‘reverse socialism’ where the BoE has allowed banks to play with more casino money at the expense of the populace that is fed grotesque lies by Governments that get more and more devious.
Bill Kruse:
So – you are saying that (e.g.) I bought a TV for £300n but because I have paid them for other thing I’ve bought then I owe them nothing.?
I’d like you to start a political party and ask for votes – and when you don’t get any you can then go for it as, clearly you know what is good for us?
It is highly unlikely that banks could function under a regime where a pound could not go out until a pound was in. In fact, it is unlikely they could function in any morally correct way of operation. I will pay no attention to any politician, until I find/hear one that accepts one fundamental fact: that corporate benefits far outweigh social benefits, and that commercial operations are so dependent on government money [well, ours] that they are effectively bankrupt enterprises run by [morally] bankrupt people. Unfortunately, political parties and people are comprised of the same morally bankrupt people. So nothing is going to change.