Shocked at levels of unsecured debt

[talks2much]

Hi,

Off work for a few days and pondering the recent budget and the state of the economy. I recently started working in a new job where I get to see mortgage applications and data relating to affordability assessments. I have been STAGGERED by the levels of unsecured debt that I have seen and this has made me think that it needs to be much better regulated.

About 50% of the applications that we receive are from people looking to remortgage to raise funds to pay off debts etc. Some of the amounts I have seen are just unbelievable. I have seen applications from couples on high incomes, asking to borrow more to pay off eye watering levels of unsecured debts - debt's higher than my first mortgage was! Many Many examples of people in 6 figures of unsecured debt. How did this happen and why were these people allowed to keep borrowing? Couples of 100K a year plus, owing the same on credit cards and loans. The system must be broken

A further worry if that the recent employer NI rises means that there will almost certainly be job losses/hours cut - what's going to happen when all of these people can't pay these debts as their income has gone/reduced? What happens then?

Surely we need to massively reduce the amount that people can borrow on non-mortgage debt?

If you have an index linked pension it could be that you do have the lump sum to spend! These are the best pensions. Plus people get money from inheritance. If people see a bungalow as an investment then so be it. They can grow old there and it meets their needs. Not what I would do but we have friends who need a bungalow and find they are 50% more than the value of their house. So sometimes bringing a bungalow up to scratch can be worth it. No upheaval of moving when you are past it! I’m planning to live on my ground floor! DCs horrified!

Obviously only if I cannot get up the stairs!

My friends have a big four bedroom house, they're planning to live on the ground floor. There's already a bedroom bathroom there.

The thing I wondered is how they would know if the roof started to leak or leaks anywhere. Would those unused rooms get damp and decay if shut off completely.

@justasking111 I guess we would send DC up the stairs! It’s not entirely sensible. I agree. We can definitely afford a bungalow. New ones being built (on the edge of a village with no shop!) or real community are from £750,000. Many cannot afford them as they cost more than their houses are worth, it’s hardly trading down.

Agreed, nice apartments here are even more expensive than bungalows.

@timetodecide2345 yes the elderly relative I mentioned on my earlier post is an uncle- tiny dropping to bits housing association flat- million in bank- no kids, no relationships ever , no holidays, and to be frank no life!! A good life surely is a balance really

@littlelandlord7

I wish children were more widely educated on finances.

Definitely. It needs to be baked into the curriculum/several subjects year after year after year. Not just as a couple of Maths lessons with the complicated equation for compound interest in year 10 that most pupils won't be good enough at Maths to understand. There are so many ways that financial maths and financial literacy could be included as a side-issue in different lessons at different ages.

I once looked at a very old English textbook and one of the comprehensions was a baking recipe - part of it was working out the total costs, which was simple arithmetic, no complicated equations, and probably the ability of the average 10 year old, but it was in an English paper! Another part of it was scaling up for making a bigger cake. Rather than modern "comprehensions" which are usually based on literature, it was a "comprehension" based on a real life situation. So much more useful! That's the kind of thing I'm thinking of when I say "bake in" finances to other subjects.

Finances could be brought into History, Geography, REP, sciences, etc as well as Maths, but also into computer studies, etc - not as major subjects in their own right, but just, as I say, as side issues when studying other things. In "real life" finances affect everything, yet they're barely mentioned in schools at all! Whilst we're here, I'd also want to see Excel spreadsheets form it's own separate section of Maths right from year 7 onwards.

But that's pretty common to just live in part of a house and effectively ignore the rest. Just watch a few episodes of Homes Under the Hammer or the Great House Giveaway! People with mobility issues really do just stop going upstairs and live entirely downstairs instead - you can see it on those programmes. Likewise if someone has a damp problem at the back, say from a roof or guttering failure, they just live at the front instead.

We have bought at all of the right times and have been incredibly lucky.

For people getting on the property ladder now, I can imagine how shit it would be.

We bought for £415k in 2019 and the house next to us which is slightly worse than ours has just been sold for £595k.

We have literally done nothing to gain £200k in 5 years.

Presumably the upstairs rooms would have heat rising from the downstairs rooms and radiators turned down, rather than completely off.

Although people might live downstairs, I'm sure a weekly check of the upstairs could be completed - e.g. by family or a cleaner, etc.