The credit crunch ?

[Arch]

I just flipped in here to see how the credit crunch thread was going and see that it's now discussing fresh or dried pasta. Who said satire was dead

Fair point! Although, sometimes, when the ships sinking, all you can do is concetrate on the quality of the pasta, as everything else is too enormous to think about...

 

[rich p]

Fair point! everything else is too enormous to think about...

As Eric Morecombe would have said," There's no answer to that"

Steady on girl.

 

[longers]

I've got a question about negative equity. I'm very close to completing on a house purchase - if the value of it goes down after I have bought it, that's negative equity right?


Does it make much of a difference to me on a day to day basis? I'm thinking it would only be a problem if I had to sell it at this new lower price. Or can it affect other things too?

 

[rich p]

I've got a question about negative equity. I'm very close to completing on a house purchase - if the value of it goes down after I have bought it, that's negative equity right?


Does it make much of a difference to me on a day to day basis? I'm thinking it would only be a problem if I had to sell it at this new lower price. Or can it affect other things too?

I think you're only in -ve equity if, were you to sell it, you wouldn't have enough to cover the borrowed bit(i.e. the mortgage).

 

[gbb]

I've got a question about negative equity. I'm very close to completing on a house purchase - if the value of it goes down after I have bought it, that's negative equity right?


Does it make much of a difference to me on a day to day basis? I'm thinking it would only be a problem if I had to sell it at this new lower price. Or can it affect other things too?

If you remain solvent and can make your mortgage payments, -ve equity isnt really an issue other than the fact your payments are higher than the properties actual value (sorry, stating the obvious)
In the 90s crash, we had friends who brought JUST before the crash.
Paid £50K....within months it was worth £32K. They had to sit it out for 6 years before they could re-coup their money. Dont underestimate the possibilities and impact of a crash.
That said....they simply continued living in the house..they didnt make money...they didnt lose any.

 

[bonj2]

My mate says that there basically IS NO "credit crunch", or not one that's due to 'subprime mortgages' in the US anyway - it is basically american investment banks taking money out of the system because they're in league with the federal reserve, and because they can. Also that america is effectively a banana republic (I think the reasoning for this being partly that their central bank is not controlled by the government, and also the fact that many of the financial mechanims that go on between the two are not enshrined in law at all).
I found it a bit conspiracy theory-ish, as no doubt I'll be the subject of such jeers for being, but I found it very hard to argue as to why the 'official' version of events was actually more likely to be the truth, as all his reasoning seemed to be backed up by fact though I can't remember lot of the technical details - although a lot of his beliefs come from the teachings of a guy called Noam Chomsky who is apparently a very highly respected intellectual on the subject.

 

[Alan Frame]

The government is quite crafty about what it includes in the inflation statistics

Now that has got to be the understatement of the decade !

They are nothing but lying, conniving cheats...scum of the earth. I hate politicians !

 

[longers]

Cheers rich p and gbb - I won't lose any sleep over it then.

 

[MarkF]

If you shop sensibly it is possible to eat good but effectively.

Pre-packaged stuff costs a TON.

Whereas stuff you buy and cook doesnt.

Good advice, I do the cooking for a family of five and usually but not always, I cook rather than "heat". We eat super healthily, plenty of fish, fresh fruit and vegetables and the kids have plenty of "bad" snacks to hand too, as kids want. I don't have to watch the pennies and I don't know what our weekly food bill is but I know it's less than £100...... for five people! Oh, and we rarely shop at a supermarket.

I work from home, have no mortgage, debts or loans so the whole credit crunch thing will pass me by, like it will most people except those who have spent money they didn't have, chasing a lifestyle they neither deserved nor could afford, no matter what the reality show/mags told them to the contrary.

All in all I think it's a bloody good thing, a dose of reality was well overdue.

 

[gbb]

I think that if the "credit crunch" brings lending terms and conditions to a more sustainable footing, then that's no bad thing. 100% mortgages are absolutely absurd - everyone knows that house prices rise and fall over time. I would also expect that savers could benefit from better interest rates, which may just encourage us to stop living on credit.

Absurd at this moment..yes, without question....but once everything settles down again, they'll be back.
I purchased my house some years ago with a 100% mortgage. Just before the current problems, it was worth 6 times what i paid for it . Its still worth at least 5 times its purchase value even now.

When conditions are right (as much as they can be)...100% mortgages have their place.

That said, it's quite correct they've withdrawn them right now.

 

[ChrisKH]

Good advice, I do the cooking for a family of five and usually but not always, I cook rather than "heat". We eat super healthily, plenty of fish, fresh fruit and vegetables and the kids have plenty of "bad" snacks to hand too, as kids want. I don't have to watch the pennies and I don't know what our weekly food bill is but I know it's less than £100...... for five people! Oh, and we rarely shop at a supermarket.

I work from home, have no mortgage, debts or loans so the whole credit crunch thing will pass me by, like it will most people except those who have spent money they didn't have, chasing a lifestyle they neither deserved nor could afford, no matter what the reality show/mags told them to the contrary.

All in all I think it's a bloody good thing, a dose of reality was well overdue.

I'd have to say that is impossible where I live. Putting aside the fact that we have to shop at a supermarket since there is no alternative, we also cook properly the main meal once a day and eat fresh fruit and vegetables but can't do it for £100 without maybe spending an inordinate amount of time acquiring the goods from different sources or using lower quality. And that's a family of four. We do have to concentrate on low-fat (wife, but she looks great on it) and high carb, low roughage (for me) ingredients and even have two sets of meals at times as a result so that's some of the reason our bill is higher. Our kids school meals are rubbish so we do make those fresh every day, so that adds to it.

No mortgage? Crikey, if only. The only people we know without a mortgage have inherited, or work as dealers in the City. Even then, they are buying second homes 'on strap' in Scotland and Florida and hoping their bonuses are high enough to pay them off (again, if only).

 

[bobg]

My total income for a family of 3 is less than what some you spend on food. Good job the mortgage is paid off

 

[Kirstie]

Unless most of my family dies and leaves me all their worldly goods, or I rob a bank, there's no chance I can pay my mortgage off until I am 65. It's just unthinkable. There's some very lucky (or privileged) people on here.

 

[User482]

Absurd at this moment..yes, without question....but once everything settles down again, they'll be back.
I purchased my house some years ago with a 100% mortgage. Just before the current problems, it was worth 6 times what i paid for it . Its still worth at least 5 times its purchase value even now.

When conditions are right (as much as they can be)...100% mortgages have their place.

That said, it's quite correct they've withdrawn them right now.

They are extremely risky - you are banking on a substantially rising housing market, and the rises of the last 10 years are completely abnormal. Maybe ok if you're planning to live in the same house for many years, but what happens if you have to relocate?

 

[Arch]

Unless most of my family dies and leaves me all their worldly goods, or I rob a bank, there's no chance I can pay my mortgage off until I am 65. It's just unthinkable. There's some very lucky (or privileged) people on here.

I don't have a mortgage...

I have rent, though...

Still it means if I suddenly have a change of circumstances and want to move, one month's notice and off I go, no arseing about selling, or negative equity or anything like that...

I duno what Mark's situation is, but I can imagine that if one bought at the right time, something that needed renovation, and you had a bit of a legacy or you had just sold and were downsizing rather than striving for an ever bigger house, you could be mortgage-free without being 'privileged'. Lucky perhaps, but not the sort of luck I'd begrudge anyone.