Is an Irish neg eq mortgage holder more indebted than the average 3rd world resident?

Slideshowbob

Take an Irish person who bought between 2003 and 2007.

They may be in negative equity to the tune of 50-150k.

Whereas an empoverished person in a 3rd world country may have no personal debt on themselves?

Am I missing something here?

Can we have a discussion about this?

Am I being too simplistic?

I hope the mods will let this thread run unlike the last one, or if they are to close this again please explain where it does not meet the Irish Economy criteria, thanks

Victor

That may be true. However, it is only looking at one part of the picture - it doesn't take into account assets, income or any of the overall wellbeing measurements.

Note that "First/Second/Third World" is an out-dated notion and "Developed/Developing World" is preferred. About 85% of people live in developing countries and their incomes, assets and debts vary hugely.

ArphaRima

(disregarding the pedantics in using the terms 1st/2nd/3rd world)
3rd world I would expect most people to consider as being sub-saharan Africa.

A typical person in the 3rd world cannot get into debt. They live hand-to-mouth.
No money equals no food = death.

If a sub-Saharan African in a poor village could even borrow 10 grand they would no longer be poor. They would run their village.

Oh and it has nothing to do with the Irish Economy. Suggesting it might displays a serious lack of intelligence or at the very least a world perspective.

Owning a house in the Ireland whilst earning first world salaries (or social benefits) still places you in the top 10-20% worldwide in terms of lifestyle, income, and wealth.
I would consider no Irish citizen to be poor. The UN backs up my definition.
http://en.wikipedia.org/wiki/Poverty_threshold
But poor is relative. Somebody in negative equity does not even come close. Negative equity = mortgage owed being higher than value of property. First world problem most people would love to have.

http://en.wikipedia.org/wiki/Poverty_threshold

femur61

As far as I remember being in primary school in the 70s we were considered to a third world country. Parts of Ireland didn't have running water or electricity. Today people have huge debt but we don't meet the criteria.

ardmacha

This suggests that there were problems with teachers in the 1970s too. Ireland then, as now, was in the top 10% of nations. The ESB led the way in electrification, most places without electric in the 70s were in the 6 counties (or Kerry!!).

Slideshowbob

fluffer wrote: »

Oh and it has nothing to do with the Irish Economy. Suggesting it might displays a serious lack of intelligence or at the very least a world perspective.

]

Cheers for the personal insult. What about attacking the post not the poster?

I disagree, of course it relates to the Irish economy!!!

SugarHigh

It depends how much of your income it takes to service your debt. I'd rather be paid €1000 a week and spend half of that servicing debt than be paid nothing.

Kavrocks

Slideshowbob wrote: »

They may be in negative equity to the tune of 50-150k.

Negative equity will only come into play if that person decides to sell the asset which is in negative equity. It has little to no bearing on somebody's debt levels until they sell so in answer to your question in the thread title I would say Yes and No, it all depends on the situation of the individual in question and a range of factors.

Also their could be some people in developing countries more indebted than people in Ireland with a mortgage on a house bought between 2003 and 2008.

schween

I don't understand the obsession with negative equity. I mean, I buy a house for 300,000 and it's now worth 200,000. I decided that 300,000 was the price I would pay. In hindsight, it may have been too much, but as long as I am able to repay this doesn't affect me. People borrow to buy cars all the time that instantly lose a lot of value and they are put in negative equity, but nobody says anything.

I don't understand the concern over negative equity. Can someone explain?

And to even suggest that a person in negative equity is worse off than a poor person in a developing country is just ridiculous!

Squall19

schween wrote: »

I don't understand the obsession with negative equity. I mean, I buy a house for 300,000 and it's now worth 200,000. I decided that 300,000 was the price I would pay. In hindsight, it may have been too much, but as long as I am able to repay this doesn't affect me. People borrow to buy cars all the time that instantly lose a lot of value and they are put in negative equity, but nobody says anything.

I don't understand the concern over negative equity. Can someone explain?

And to even suggest that a person in negative equity is worse off than a poor person in a developing country is just ridiculous!

Exactly.

Load of bull****.

Anyone that buys a car is in negative equity, anyone that buys an electrical product is in negative equity, anyone that buys anything besides land and property has nearly always been in negative equity.

Yet you don't hear anything about that.

Property is not a business, it's not to generate revenue, but that's what it was used for here, it was used by many to generate revenue, get rich and it bombed.

If someone bought a house for 300k and now its worth 200k that's there problem, no one forced them to buy and they must live with it.

Mortgage is for the long haul and they must see out this storm as best they can, if not they must face the consequences and learn from it.

If someone still has a job and they are negative equity, tough ****.

If someone has lost there job and in negative equity, they should be allowed time to recover.

If someone bought property as an investment, like my landlord did ( 36 year old teacher working in Middle East somewhere ) and thought he was very smart renting it out, thinking the rent would cover the mortgage, then tough ****.

His plan failed.

johnnyskeleton

It is important to remember that money is not wealth - it is a measure of wealth. The wealth is the goods and services that a person or society has. It's amazing how many people believe that cash/gold coins etc are wealth, but really they are only a means of acquiring stuff in the future

ninty9er

The average Irish 18 year old with a car loan is more indebted than most third world villages.

Like comparing apples with pig iron.

Welease

schween wrote: »

I don't understand the obsession with negative equity. I mean, I buy a house for 300,000 and it's now worth 200,000. I decided that 300,000 was the price I would pay. In hindsight, it may have been too much, but as long as I am able to repay this doesn't affect me. People borrow to buy cars all the time that instantly lose a lot of value and they are put in negative equity, but nobody says anything.

I don't understand the concern over negative equity. Can someone explain?

The primary problem is the inability to sell the asset and move/purchase/downsize as the mortgage cannot be repaid from the sale.. In essence people can be stuck with loans they cannot afford, or living in an area where no jobs are available to allow repayment of loans.

Godge

Slideshowbob wrote: »

Take an Irish person who bought between 2003 and 2007.

They may be in negative equity to the tune of 50-150k.

Whereas an empoverished person in a 3rd world country may have no personal debt on themselves?

Am I missing something here?

Can we have a discussion about this?

Am I being too simplistic?

I hope the mods will let this thread run unlike the last one, or if they are to close this again please explain where it does not meet the Irish Economy criteria, thanks

Very simplistic post.

The level of indebtedness of a person is only slightly relevant. What is more important is their ability to repay.

Take the example of a typical Irish property owner who stupidly bought in 2007 (something they didn't have to do, but part of keeping up with everyone else and listening to the lemmings). They have a mortgage of €300,000 on a property now worth €150,000.

Say mortgage is costing €1,500 per month. Their net income is €1800 per month, leaving them €300 per month to live on.

A person in Niger/Kenya/Bangladesh has borrowed €100 from a money lender to pay for medical costs for their parents. Each week they must pay back €5 for 70 weeks. Their weekly income is €7 leaving them €2 euro per week to live on.

Which would you take?

The idea that some Irish people have that they are so badly off because of their negative equity needs a good kick in the ass type of reality check when you realise how bad other people around the world have it.

maninasia

Just compare the situation to farmers in India.

http://articles.cnn.com/2010-01-05/world/india.farmer.suicides_1_farmer-suicides-andhra-pradesh-vandana-shiva?_s=PM:WORLD

Joe 90

Squall19 wrote: »

Exactly.

Load of bull****.

Anyone that buys a car is in negative equity, anyone that buys an electrical product is in negative equity, anyone that buys anything besides land and property has nearly always been in negative equity.

Yet you don't hear anything about that.

Property is not a business, it's not to generate revenue, but that's what it was used for here, it was used by many to generate revenue, get rich and it bombed.

If someone bought a house for 300k and now its worth 200k that's there problem, no one forced them to buy and they must live with it.

Mortgage is for the long haul and they must see out this storm as best they can, if not they must face the consequences and learn from it.

If someone still has a job and they are negative equity, tough ****.

If someone has lost there job and in negative equity, they should be allowed time to recover.

If someone bought property as an investment, like my landlord did ( 36 year old teacher working in Middle East somewhere ) and thought he was very smart renting it out, thinking the rent would cover the mortgage, then tough ****.

His plan failed.

If someone bought a house for 300k and now its worth 200k that's sad but it may or may not have anything to do with negative equity. If someone bought a house for 300k and now its worth 200k and they owe 250k on it then it is negative equity. If someone bought a house for 300k and now its worth 200k and they owe 150k the its not negative equity.

If they can make the payments they are not in trouble, negative equity or not. They may well feel hard done by and blame everything but themselves but they are not in trouble. If they cannot make the payments then they are in trouble whether in negative equity or not but if they cannot make the payments and are in trouble and the lender is too.

The lender these days is of course the Irish taxpayer in the final analysis.

Sleepy

If someone bought a house for 300k in the boom and they can still get 200k for it now, I think they're doing alright or have done some serious home improvements tbh...

SBWife

What a stupid irrelevant question.

Icepick

Godge wrote: »

Say mortgage is costing €1,500 per month. Their net income is €1800 per month, leaving them €300 per month to live on.

A person in Niger/Kenya/Bangladesh has borrowed €100 from a money lender to pay for medical costs for their parents. Each week they must pay back €5 for 70 weeks. Their weekly income is €7 leaving them €2 euro per week to live on.

Some would seriously tell you that it's easier to live on €2 in Kenya than on €300 in Ireland.

andrew

While the comparison with people in a 3rd country is a bit off, in general levels of debt are important. If someone for whatever reason is in negative equity - be it because they invested stupidly, or just wanted to buy a car they knew would lose value, the important thing is that that person is now in debt. Where it was a car, the person could plan for it and expected such debt. The problem is that with housing, people (stupidly, in hindsight), never expected to be in debt really. They always figured that if repayments got too high they could sell and move into a cheaper house, without any kind of debt overhang.

So now you've got a significant number of people saddled with debts they a)didn't think they would have and so didn't factor in to their decision to buy a house, and b) possibly can no longer afford. Aside from the social issue of people being miserable living somewhere they might not really want to live, these people now have pretty no money to spend or invest in the economy, which is bad.

I'm not saying that we should do something about this problem (because any solution would probably be just as the problem itself), but just saying what the problem is as it stands.

Godge

Icepick wrote: »

Some would seriously tell you that it's easier to live on €2 in Kenya than on €300 in Ireland.

Only those who have never been to Kenya.

hmmm

So now we're so full of self pity that we think people in the third world might have an easier life because they're not stuck in a celtic tiger mansion with a large mortgage.

Although if you live in Galway, you also do not have access to clean water.

Godge

hmmm wrote: »

So now we're so full of self pity that we think people in the third world might have an easier life because they're not stuck in a celtic tiger mansion with a large mortgage.

Although if you live in Galway, you also do not have access to clean water.

Ridiculous isn't it. And this is being written by people typing on computers in houses with electricity and high-speed broadband. Do they have no idea how the real 99% live?