The credit crunch and caravanning

[Administrator]

Do you anticipate the credit crunch affecting how you caravan? For example, might it reduce the number of holidays you take or hold you back from buying a new caravan in the near future?

[Guest Tracker]

Being retired with no mortgage, no loans, no debts and with sufficient income and capital - the result of a working lifetime of prudence and forethought - together with a large slice of lucky timing - the credit crunch makes no difference to us whatsoever other than the effect of continually rising prices.

 

So we will carry on going where we want when we want - and it's flippin great!

 

However I do really feel for our sons and their generation of home makers who have been well and truly let down, shafted even, by successive government's failure to legislate against what everyone else, expert and layman alike, could see coming for years.

 

So now instead of helping hard pressed families stay in their homes they are bailing out the perpetrators of this fiasco and in my view it is an absolute disgrace - that we will all be paying for for probably generations to come.

[Sherekat]

:-( Unfortunately we have had to decide that we cannot afford to go away in the caravan this October half term. We tend not to go too far - we are lucky that we live in beautiful cornwall, but my husband is self-employed, so apart from the cost of the holiday we would lose his income for the week.

 

Fortunately we were very lucky in that we bought a lovely caravan second hand at a fantastic price last year, so we will not have to buy another for several years, but like everyone we are having to watch every penny at the moment.

 

Really it is my son I feel sorry for as it is not his fault that we are having to miss out on a holiday.

[CliveH]

I have worked in the finance side of things for many years. The issue as I see it is poor regulation and ignorance and gullibility by the regulators.

 

Equitable Life was financially week, but the FSA refused to see it. Howard Davies the then head of the FSA told all IFA’s that if we advised clients to bail out of Equitable he would sanction us! This despite the fact that an IFA’s responsibility is to the client not any Life Office! Was the fact that Equitable life ran the Civil Service AVC scheme (and so the FSA’s own AVC scheme) something to do with that?

 

Then we had the issue of mortgages. Possibly the biggest financial purchase anyone ever makes but the lending institutions (the banks) managed to convince the FSA that selling a mortgage was not really a financial transaction. It changed recently a few years ago as now mortgages are a regulated activity, but as Northern Rock proved, the FSA has little idea of how a bank works as the FSA said that Northern Rock was sound and that it was only to be assessed every 3 years. About 6 mths after its last FSA visit it went bust.

 

This meant that a bank could sell you a mortgage with no audit trail or recommendation on file or FSA oversight at all up to a few years ago. But if we recommended a £10 a month ISA then we had to have a full client file, documenting their financial circumstances and produce a written report outlining what and why we made that recommendation.

 

In contrast a bank could lend you hundreds of thousands of £’s and up until a few years ago, the FSA was not bothered about that process. The whole thing was crazy and we are now reaping the rewards of this appalling oversight.

 

Now the FSA generally does a good job as I see it. BUT and it is a big BUT – it seems that after the regular series of debacles (there are far more than the two above) that show it to be truly ignorant of even the basics of how a bank, an insurance company, a life office or an investment house actually works. As a consequence the FSA tends to make rather silly and odd requirements that do very little to protect the consumer (which is its specific task) but have allowed the banks to do what they like.

 

As an IFA I am pleased that complaints about us are decreasing rapidly but at the same time those against the big High Street outlets are increasing:-

 

(Source Money Marketing 29th May 2008)

 

“Complaints to the Financial Ombudsman Service about IFAs have plummeted from 12 per cent of total cases in 2006/07 to just 4 per cent in 2007/08 while bank complaints rocketed.”

 

“The FOS says over 95 per cent of businesses that fall under its umbrella received no complaints, while six of the UK's biggest financial services groups were involved in half of the total number of cases.”

 

That last point from the FOS is worth repeating:-

 

…..while six of the UK’s biggest financial services groups were involved in half the total number of cases (complaints)”.

 

So why did the FSA not see this coming? I really do not know! – I feel they should do considering the cost of the FSA. But they did not see the reality of what was Equitable Life. We all knew it was financially weak. So why did Howard Davis, the then head of the FSA try to prop it up by threatening IFA’s?

 

Why was Northern Rock given a clean bill of health when we knew that compared to say Nationwide, that was lending only about 20% more than it held on deposit for its investor clients, Northern Rock was the complete mirror image and was lending 80% more than it held on deposit from its investors. Northern Rock borrowed much of that 80% from US banks.

 

So it was bloody obvious that this business strategy was far more dangerous than that of a well run and prudent lending strategy of the Nationwide! - And the bundled credit issue in the States was all over the financial news, so you would have thought that the UK regulator would have been looking for companies vulnerable to US debt going “bad”.

 

Why the did not see it? – No idea – that part of the FSA were “asleep at the wheel” in my view – an awful repeat of their actions with Equitable Life.

 

[Guest Tracker]

Totally agree Clive.

[cheetahdavie]

Tracker is a very "lucky" person.

I have no Mortgage,no debts,but I do have pensions and Investments of Capital I have accrued over my lifetime.

The pensions are not yet affected..but will be!.The investments have already lost me many thousands of pounds and may well lose more.My House ..which i hoped would sell at a good price so that after 50 years of "graft" I could downgrade and capitalise upon..has lost 25% of its value.The retail sector will be in turmoil and we will all now suffer,every single plan the average guy has made will be made null and void.Anyone who says the "credit crunch" wont effect them is either a relative of those guys who received millions for being crap at their jobs,or related to Gordon whatisname..Mcavity?I have seen many things in my life but the last 11 years of Blair and now whatsisname makes me cringe.I bet tracker gets "caught" like us average guys?

[Bazza454]

cheetahdavie - 2008-09-30 12:13 AM Tracker is a very "lucky" person. I have no Mortgage,no debts,but I do have pensions and Investments of Capital I have accrued over my lifetime. The pensions are not yet affected..but will be!.The investments have already lost me many thousands of pounds and may well lose more.My House ..which i hoped would sell at a good price so that after 50 years of "graft" I could downgrade and capitalise upon..has lost 25% of its value.The retail sector will be in turmoil and we will all now suffer,every single plan the average guy has made will be made null and void.Anyone who says the "credit crunch" wont effect them is either a relative of those guys who received millions for being crap at their jobs,or related to Gordon whatisname..Mcavity?I have seen many things in my life but the last 11 years of Blair and now whatsisname makes me cringe.I bet tracker gets "caught" like us average guys?

David, I think that you are missing a couple of points here.

Never met Tracker but I would suggest that the reason you say he is "lucky" is because during his lifetime he has worked hard, lived within his means and managed to put a few bob to one side for a rainy day, like most responsible people do.

In terms of your investments, there is a clear warning whenever you buy shares etc that the price can go down as well as up, that's the risk, but presumably you've been taking and reinvesting the dividends.

Like the majority of people with investments, myself included, everyone is taking a hit at the moment. I managed to sell my Northern Rock shares last year at £4, thought about selling my Bradford and Bingley at £3, didn't, and now they are worth 20p if i'm lucky.

This is probably as bad as most of us have seen, but the markets will eventually turn round, they always do. Until then you just have to sit on your hands, forget about the spreadsheets and be brave.

You say that you have "lost 25% of your house value", on paper you have, but don't forget that if you are planning to downsize, then the house that you will purchase will have reduced in value by a similar amount.

This is just a Market Correction, anyone who thinks that house prices could continue to increase in value by 12 to 15% per year is living in a dream world.

 

[ROON]

Sadly, yes it WILL affect my number of weekends away ........ lack of saving responsibly for rainy day? .... nothing to do with bad investments in the bank ...... just bad investments in husband. Will go for longer periods but less of them so less travelling. :-(

[Hymer C 9.]

We have already given this a great deal of thought, because one way or another it will affect us through rising costs, but we usually holiday in the Motorhome one year touring the UK & the next touring abroad, and next year we are due to go abroad.

So what we have pondered on is the fact yes we are retired so it follows each year may not be in the good health we enjoy at the moment, so have decided to carry on with our plans to take the Motorhome to Greece & Italy next year the following year will be in the UK then from there we will reassess the situation so are planning even a bit further ahead. Carol.

[Mel B]

Bazza454 - 2008-09-30 12:54 PM

 

You say that you have "lost 25% of your house value", on paper you have, but don't forget that if you are planning to downsize, then the house that you will purchase will have reduced in value by a similar amount.

 

That's fine, but if you're wanting to sell and not buy another (having already got another) and just want the excess capital to live on as you're not entitled to anything else yet, then you're a bit stuffed! 8-)

 

This is just a Market Correction, anyone who thinks that house prices could continue to increase in value by 12 to 15% per year is living in a dream world. 

 

Its the areas that have increased by such large margins that have fallen the most, as our area didn't go up anything like that each year we're hoping our 'price fall' will be less. :-|

[Bazza454]

Good points Mel, but I guess that there are not too many people trying to sell a second home to raise capital.

The ones who are trying to do this are as you quite rightly say, well and truly stuffed at the moment, but have faith, the market will turn round eventually, just hope that we are all still here to reap the benefit.....

[howie]

There's no doubt in my mind that the present credit crunch will have a adverse effect on both sales and holidays with regards to caravans.

This is all part of the leisure industry, and in terms of priorities will be one of the first things people will look to in terms of savings.

This is only a general view and will affect each of us in different ways, but for the majority, mortgages, rates and utility bills etc. will come first with 'luxury' goods being passed over until the situation improves.

[Administrator]

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