The credit bubble is bursting and tens of thousands of people face the heartbreak of repossession.

Have you been affected? Do you think you’ve borrowed too much? Are you worried about losing your home?

Share your thoughts and experiences.

Having just watched the program, what a totally biased so-called attack on everyone except the people with the debts. As usual it's everyone's fault except those who, through stupidity, ignorance, short sightedness and sheer greed, have landed themselves in debt which any grade 'C' GCE mathematics student could fathom out.

The debt has very little to do with the Government/Bank of England keeping interest low. It was low and it's still low. So nothing's changed there. Those borrowing should have thought, as I have over the last 30 years, 'how am I to pay this back', and the 'WHAT IF' factor should also be included.

A few years ago people were praising the economy and low interest rates. Wasn't it these low interest rates that were a 'positive' at the last general election. 'Oh hasn't the Government done well for our economy' etc.

I have a 50000 GBP mortgage. I have to pay for it so I have gone without the finer things in life over the past 16 years so I can pay for it. No one forced me to get a mortgage. Just as no one forces people to buy clothes or the latest technology on credit. I saved up and then paid cash for anything I wanted.

As for the Banks being responsible. Is that the same as the supermarkets and grocers shops being responsible for people being fat (oh sorry, 'obese'). Supply and demand is the cause but demand led the supply. Once again this points to the person incurring the debt.

By the way I hate the current government but I also hate bias.

 

What a relief to find I am not the only one who thought the programme was far too one sided. All of the examples bar one had used the money they had obtained to fund a lifestyle they obviously could not afford. This was not to put bread on the table but to have a good and expensive time. In these circumstances it cannot be anyone elses responsibility other than their own.

In the case of the couple facing repossession there must be more to their story. As they were both working it is physically impossible for a 27K mortgage to rise to 140K just because they could not make the occasional repayment.

I agree this subject is a big problem but I do not accept the basic premise it is all the banks fault.

As one of them said it makes no business sense for them to lend to people they think will default as the banks lose out as well. through having to write off bad debt.

graham52:

In the case of the couple facing repossession there must be more to their story. As they were both working it is physically impossible for a 27K mortgage to rise to 140K just because they could not make the occasional repayment.

 I have to say I was amazed when he was talking about his wonderful fish pond with lights and pump, and all his fish had gone. That was obviously a seriously important thing to spend cash on.

 As you say, 27K to 140K is not a small leap. With an interest rate of 7.5% and 25 year mortgage it's £199.53 a month for a repayment mortgage. This is 'apparently' beer money for the yoof <g> of today. Wish I had one of them thar repayments :)

I totally agree with all the comments so far. I too am amazed at the story of the bouncers (the family in Walsall). How can you purchase a council house, get a massive discount so you only have a £27k mortgage (which you have to have been means tested to ensure you can afford it) - and end up having to borrow to make the repayments. I disagree with the comment about the fish pond - they must have bought a hell of a lot more than that to run up that debt (unless it was a gold plated fish pond). While watching the programme all I could ask is 'where did all that money go?????'. At the end of the day, if people are stupid enough to think that secured loans and extending your mortgage is 'free money' then they deserve to rent for the rest of their lives. My first mortgage was £26k - and I was on my own. It was only about £250 a month and I always planned for 'worst case scenario' - could I raise the monthly payment if I lost my job. I did in fact loose my job shortly after getting it (just my luck) but I had enough saved and worked odd jobs to keep it ticking over until I was back in FTE. People like this make me angry because they contribute to the boom + bust housing market by behaving in this stupid way. That's not to say I let the lenders off here - they should have spotted that the Bouncers couldn't understand the concept of 'borrowing money' and should not have lent to them in the first place. I was extremely angry to hear that Mrs bouncer was heading straight for a council property - subsidised by those of us who can do basic maths. That's a disgrace - once you have purchased a council property under right to buy - if you then loose it you should not be allowed to simply go back on the waiting list. I have no sympathy whatsoever I am afraid - it's a joke - once again we bail out the pathetic and the stupid. Oh - and don't think I haven't forgotten about that stupid Racehorse man - I certainly won't be flicking him a pound when I see him begging at the train station once his house(s) have been repossessed - what an irresponsible *******

I agree with what you say.  How lucky were they to have had the opportunity to by a good house at a good discount.  How could they have not kept up a small mortgage?  Maybe 2 holidays a year, the latest in fashions, top of the range car, mobile phone all mod cons probably provided by remortgaging their property.  I have heard it all before.  Many a young couple would have given their all  to have had the opportunity to get on the property ladder and with such a small mortgage.  My son and his wife would be rubbing their hands with glee.  They can't even get on the property ladder or get a council house, yes they both work and have never been unemployed.

The lenders must take part of the blame.  With the interest rates very low, a known £1 trillion-plus of debt outstanding in the UK (a good chunk of which is consumer credit); and with the knowledge that the economy was blooming on borrowing, how come lenders weren't more prudent?  You hear of some lenders offering up to 6 times the borrower's salary...at a time when interest rates have only one way to go: up.   Madness.  It incited people to reach beyond their means (and pushed house prices up to boot!) 

The situation is worsened these days by the lack of job security everywhere.  When mortgages were invented for the average working person, a job usually meant a job for life if you wanted it that way (a "career" for the posh).  Now that isn't the case.  So a greater flexibility needs to be built into mortgage agreements to allow for the occasional redundancy etc.

The stress that the business of house-buying and mortgages causes will do the health of the nation no good in the end. 

 

I am one of the people featured in the film working at the Citizens Advice Bureau as a Debt Caseworker.  I was disgusted with the television programme because, from the stories of the people featured, it gave the impression that large numbers of people in debt are there because they are financing extravagant lifestyles through credit.  I assure you that is not the case.  The vast majority of clients I see are in debt because they are trying to live on restricted incomes and there is a change in circumstances. For example, a person with a mortgage who loses their job, a family who experiences bereavement or severe long term illness.  Most of the people I see are people who were managing their credit commitments until a particular event crippled their ability to pay.  I have never seen a model or a person with racehorses.  I have also seen numerous cases of people with long term illness on incapabity benefit or with mental health problems being lent large sums of money well beyond their ability to pay despite telling the lender they are on incapacity benefit or income support and some with questionable ability to understand the contracts they enter into.  This is clearly irresponsible lending.  To be honest, the smug tone of much of the posts is really irritating.  The programme gave a completely unreal picture of the majority of debt clients and fed prejudices against those in debt.  I am dismayed to be featured in it.  Debt, out of control, can happen to any of us, any time.   Life experiences can take all of us by surprise, bear that in mind next time you sign a credit agreement.

Let's forget about the sensationalism of the reporters and focus on the main issue.

The UK Banks and Finance houses have chased the profit and they are suffering but there are consumers out there who gambled big time on interest rates and they are losing. I have no sympathy for anyone who takes a mortgage at 5x (and more) their gross salary and then whines that they will lose thier house. I also have no sympathy for the big banks who are struggling to keep a lid on thier Bad Debt.

This country is credit mad, in fact we are the biggest consumer credit spenders in the world. What happened to earning before spending?

Totally agree with you.. I have a credit card which I pay each month and use only if necessary. I use mostly cash.   I say if you can't afford it, tough, save up for it.  I brought my children up with the same values and they too don't live with credit.  People just want want want.  Too much greed about.  If you can't afford a mortgage comfortably then don't get one.  If you get a mortgage then don't expect to have everything else, holidays, expensive clothes and mobile phones. Rent until you can afford a comfortable mortgage.  In Germany and Holland most people rent.

I still think that the finance industry as a whole should take the larger part of the blame.  They did not organise themselves at all well.   There were times you visited the bank manager if you needed a loan.  He'd assess your financial behaviour.  In those times very few people had accounts at more than one bank so he/she'd be able to check your outgoings.   Even opening an account usually required a reference.  

When credit cards appeared in 1971, credit limits were low and repayments were 10% of the outstanding balance.  

Mortgages were the province of the building societies - mutual outfits who depended on depositors to finance others' mortgages.   It was almost impossible to get one if you hadn't saved for a while and hadn't got 10% deposit on the amount you intended to borrow.

I think it was Thatcher who opened things out, allowing all and sundry to offer loans, and the banks jumping on the mortgage bandwagon - in turn allowing building societites to offer loans other than mortgages.

This makes prudent lending difficult.  How does a lender know whether a borrower is telling the truth - there's no central database (thank goodness) of individual's debt, only the trade protection blacklist.

As banks'/lenders' entire ethos is profit: to borrow money cheaply from those who can afford to lend (depositors) and sell it at a higher price to those who need it, I can hardly believe the business was so poorly regulated when it was opened to everyone, poor or rich.   

So it still comes down to a disorganised finance industry too concerned with quick profit.  Couple that with the British disease of property ownership; and the media fuelling hysteria about property ownership (they coined the phrase "getting a foot on the property ladder"), many people outreached themselves.  They probably felt that without a foot on the property ladder they'd miss out on life itself, so crucial it became.   (Sheesh, I HATE that phrase too - sick and tired of it).  So, house prices went up; lenders relaxed their rules because if all went well, they'd augment their profit even more; prices went up more; people got more hysterical about ownership...etc etc.  You know the rest.

The media are also responsible for instilling a belief that it's the value of your property that counts above all else - nothing to do with it being your home, the place in which you evolve most of your life.

Now things are cooling down.   Prices will drop until homes are in reach of first time buyers under the now-tighter rules.  Then the cycle will start over again.

We are, without doubt, heading for a recession.   One of the reasons was far too easy credit, Northern Rock was offering 125% mortgages, ****** stupid.   People are by nature greedy, and many never grow out of the childish 'I want it and I want it now' way of behaving.   This easy money has been the reason for the hype in housing prices.   The birds are now coming home to roost and many will suffer as a result.  .

Today's papers are full of stories that the Banks are being attacked by MP's, Bank Of England and the FSA for ignoring warnings on the oncoming credit crunch and having a cavalier attitude to creditworthiness.

Repossesions are up in 2007 to 27100 which is double previous years and it looks like we are heading for a negative equity crisis that will make the 90's look like a cake-walk.

Yes we are probably headed for recession and it is going to bite if you have overextended yourself. However if you are going to gamble then you have to be prepared to lose.

If you are anything like me, you will find it is easy to believe that those who are less financially prudent have nothing to blame but themselves if they cannot afford to repay their debts, but we should consider the following:

1] Less than 3% of the money supply consists of fiat currency (i.e. what most people call money - notes and coins minted by the government). The rest consists in debt. This is a consequence of the absurd banking system we have.

How can this be? Well for instance, when I had my first job. I was paid with notes and coins in a brown envelope called a pay packet. This money was unequivocally mine, and was legal tender. This is not happens today - today the money is "paid into" my bank account. The money "in" my bank account is neither unequivocally mine nor is legal tender. Instead it is a debt from the bank to me. In other words what has happened is a transfer of debts not a transfer of what we normally think of as money. This has become the normal way our economy works. Without monetary reform - which none of the major political parties have the guts to even contemplate - debt and the constant creation of debt is necessary for our economy to work.

2] The total interest required to service this debt is vastly greater than the 3% of fiat currency in circulation.

In other words our monetary system is such that if we tried to pay of this debt with the entire money supply there would be no money left and we would still be in debt to the bankers. It would be possible, in theory, for the government to increase the money supply (e.g. by printing bank notes) to cover the extra money needed but this would lead to galloping inflation. Logically the only alternative is that a certain proportion of people must default on their loans. Mathematically there is no alternative.

Now obviously the less prudent are more likely to default than the more prudent. However, given the sort of monetary system we have a certain proportion of debts must be defaulted on. This is irrespective of the prudence of the general population.

Given these facts, there should be no particular shame attached to personal bankruptcy. However it is totally unreasonable for banks to pursue defaulters in the way they do. This is because when a bank loans you money, all it does is to create two debts, one from you to the bank, expressed as a number in the banks total assets and an equal one from the bank to you expressed as a number in one of your accounts. It is true that you can normally withdraw this as fiat currency, but it is not possible for everyone to do this (This is what is called a "run on the bank") and the vast number of loans are not withdrawn as cash. In other words under normal circumstances, if you default on a loan from a bank all the bank looses is its profit plus the cost of arranging the loan - it does not loose the principal for the simple reason that it did not have it in the first place.

Bernard H

 

 

Interesting if slightly incorrect. The bank does have the principal sum, albeit on paper only. Whenever you borrow the money from the bank or building society they borrow it first from a clearing bank at a specific rate of interest. The profit they calculate is minus this but it also depends on you repaying it when you say you will. If you do not it costs the lender an "impairment charge" which comes straight off their top line.

That is why they pursue you to the ends of the Earth for it, however simplify it for yourself - go bankrupt, enter into an protected trust deed or involuntary arrangment and you get away with it. Debts cleared and then within a few years you get to start all over again!

you are right the stigma of insovency has almost disappeared.