‘The Price for Living’

The debacle over the miss-selling of endowment insurance policies and the tenuous nature of the pensions market should have made me more ‘savvy’ in the ways of the money markets and those who control them: but it didn’t. Then there was a time when certain institutions would lend money based on outrageously disproportionate income and lifestyle statements simply to secure ones mortgage business and boost their commissions and procuration fees. Well, the chickens came home to roost on that old chestnut hence the US and UK knock-on sub-prime collapse. I know because it happened with me at a time when I was vulnerable and sorely in need of sensible and sound financial advice. Mind you, I have often wondered what it is that drives most of us to want to borrow such huge sums in the first place and how today’s younger people manage to survive. They need to find a job that will pay them enough to be able to afford to live in a house. Any house: rented or otherwise. Politicians and financiers talk of rungs and feet getting onto ladders but if you live in the real world, for many, much of the advice today is still designed to help people get into debt. What is a mortgage or loan given if it is not a debt? Mortgage is such a secure word. Between October and December 2007 the average cost of buying a home in the Corby borough was £138,000 (source Provisor). Banks and building societies, on average, used to lend a maximum of two and a half times ones salary when calculating the amount to lend to a mortgagee. Imagine for one moment, and based on that figure, that you earn £30,000 per annum. Given the old lending criteria you would be given a mortgage of £75,000, leaving you to find a deposit of £53,000. Now, I could be wrong, but might I suggest that there can’t be too many young couples or singles around that can get their hands on that kind of capital. Of course there are many schemes and offers available to the first time buyer these days that didn’t exist in the 70’s or 80’s but, at the end of the day, if one borrows money from another source then it has to be paid back with interest. It might help if we were to change the terminology a tad. When one applies for money to finance the purchase of a house, or anything, the lender should make it clear that this is a very big debt that will need to be cleared. Might I suggest that what is needed now, more than ever, is affordable quality rentable council accommodation, particularly in rural areas, on a vast scale with the proviso that under no circumstance will the properties ever be sold. All those builders who are being told to stop building because of the slump in the private housing market could be immediately employed to build housing for the common good. You and I know it won’t happen: what a shame.

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