Fertility rates in Britain are dropping, and in particular many couples are delaying having children for as long as possible. One of the key reasons for this is affordability. For many people it is necessary for both partners to work in order to pay the mortgage, or to pay the rent (rents have increased as house prices have gone up). This makes it increasingly difficult for couples to start a family when they are still reasonably young. More and more women are delaying having their first baby until they are in their 30s. And because fertility rates drop off in both men and women as they age, many families are unable to have as many children as they would wish, or have to seek assisted (and expensive) methods such as IVF.
Parents are also encouraged to get back to work as quickly as possible, and housing costs add a further burden which means that for many the option of one parent staying at home to look after children is simply not there. Evidence suggests that putting babies into nursery care can have long-term negative effects, and again people are forced into making difficult choices based on the need to pay the mortgage.
Friday, 27 April 2007
Wednesday, 11 April 2007
Fool's Gold
We are in the middle of a strange phenomenon. House prices have been pushed up and up. They have risen at nearly double the rate of earnings over the past 35 years. If house prices had increased at the same rate as inflation the average house would cost about £60 000, and not three times that amount.
What this means is that people, while paying off debt, have a perception of wealth. They view their lives through a veil of unreality called – house price – and fail to see clearly. That terraced ex-council house may be valued at £160 000, but it is still an ex-council house. The type of place that, 20 years ago, ordinary folk could afford to live in, pay their rent, pay their bills and stay out of debt. Now people, living in the same house, ostensibly owning it, struggle to pay the mortgage, accumulate additional debt, may be trapped in a job they don’t like, and can’t move, because it’s not that easy to sell an ex-council house.
But having been fooled into believing that because the house has a high value, people are then seduced into ‘releasing equity’, or securing other loans on the house, or taking out non-secured loans.
This in turn is fuelled by the rampant consumerism, or affluenza, that is afflicting Britain today, which is promoted by the media and by the retail industry. The plethora of TV programmes about home improvements, together with ‘buy now pay nothing for 12 months’ deals lure people to over commit financially on things that they probably don’t need. Rampant consumerism hits all areas of peoples’ lives and this, combined with an obsession with following, and copying, celebrity lifestyles further condemn people to higher and higher levels of debt. Recent reports show that many women over 35 have accumulated debts of £8,219.
What this means is that people, while paying off debt, have a perception of wealth. They view their lives through a veil of unreality called – house price – and fail to see clearly. That terraced ex-council house may be valued at £160 000, but it is still an ex-council house. The type of place that, 20 years ago, ordinary folk could afford to live in, pay their rent, pay their bills and stay out of debt. Now people, living in the same house, ostensibly owning it, struggle to pay the mortgage, accumulate additional debt, may be trapped in a job they don’t like, and can’t move, because it’s not that easy to sell an ex-council house.
But having been fooled into believing that because the house has a high value, people are then seduced into ‘releasing equity’, or securing other loans on the house, or taking out non-secured loans.
This in turn is fuelled by the rampant consumerism, or affluenza, that is afflicting Britain today, which is promoted by the media and by the retail industry. The plethora of TV programmes about home improvements, together with ‘buy now pay nothing for 12 months’ deals lure people to over commit financially on things that they probably don’t need. Rampant consumerism hits all areas of peoples’ lives and this, combined with an obsession with following, and copying, celebrity lifestyles further condemn people to higher and higher levels of debt. Recent reports show that many women over 35 have accumulated debts of £8,219.
Debtor's Prision
The term ‘homeowner’ is often a misnomer. For many owning a home is really about managing a huge debt. The way in which language is used is misleading, especially within the realms of the financial services world – ‘credit’ usually means ‘debt’. Mortgage means debt. And for many people debt equals worry.
Britain is fast-becoming a debt-laden society, which means that people are seriously constrained in their life choices. If there is a commitment to debt then this impacts on what jobs people can do, the hours people need to work, time spent with their families and so on. Debt in Britain is reaching alarming levels, with the current figures of debt secured on homes being around £1.2 trillion.
Unsecured debt in Britain is about twice the average in Europe. Far from being a nation of homeowners, Britain is fast becoming a nation of debtors.
Britain is fast-becoming a debt-laden society, which means that people are seriously constrained in their life choices. If there is a commitment to debt then this impacts on what jobs people can do, the hours people need to work, time spent with their families and so on. Debt in Britain is reaching alarming levels, with the current figures of debt secured on homes being around £1.2 trillion.
Unsecured debt in Britain is about twice the average in Europe. Far from being a nation of homeowners, Britain is fast becoming a nation of debtors.
Thursday, 5 April 2007
Mortgage Madness
The de-regulation of banks and building societies in the 1980s provided an environment in which lenders could provide larger mortgages to more people. The amount of deposit people needed to find to put down on a house decreased, and so people were able to take on more debt. The multipliers – how many times the income could be borrowed – began to increase, and now it is possible for people to borrow up to five times their salary, sometimes even more.
During the 80s and 90s irresponsible lending flourished, and the now largely discredited endowment mortgages became common place. It is generally recognised that many endowment mortgages were mis-sold, with clients being told of the money they would make over and above paying off the mortgage. Money that could pay for a new car or a dream holiday. It wasn’t long before it became apparent that many of these policies were under performing and would fall well short of paying off the mortgage let alone providing additional income to the borrower.
The problems caused by taking on too much debt include an inability to meet repayments when interest rates increase, problems with negative equity, and ultimately increasing numbers of repossessions. The misery of mortgage madness.
During the 80s and 90s irresponsible lending flourished, and the now largely discredited endowment mortgages became common place. It is generally recognised that many endowment mortgages were mis-sold, with clients being told of the money they would make over and above paying off the mortgage. Money that could pay for a new car or a dream holiday. It wasn’t long before it became apparent that many of these policies were under performing and would fall well short of paying off the mortgage let alone providing additional income to the borrower.
The problems caused by taking on too much debt include an inability to meet repayments when interest rates increase, problems with negative equity, and ultimately increasing numbers of repossessions. The misery of mortgage madness.
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