Friday, September 26, 2008

Credit Crunch

What's the answer to today's financial crisis? Getting another credit card? I don't think so. Thanks to Mark Sayers for the link to this disturbing advert.

Over at
Between Two Worlds, David Kotter has some thoughts about the current situation - also from an American perspective - that are worthy of note for Christians. I found this article via Tallskinnykiwi and then Christian Personal Finance. Thanks guys!

Everyday the news seems to indicate that we are moving into a recession and people fear that their livelihood is at risk. For those not eligible for housing benefit or a council house, privately renting can be very costly. Getting a mortgage is thought to be a prudent move by many. In some parts of the UK it may even be cheaper to buy than to rent. But then there is the risk of getting into debt. Of course, taking out a secured loan such as a mortgage isn't debt in itself but defaulting on the repayments is. With falling house prices and a stagnant market a home owner could end up with massive debts. People now need to be more careful than ever if they are not to end up losing their homes.

Our church has just started a mission initiative towards the homeless. There is an ever present need for this but, I was just thinking, with the ways things are going we might be seeing even more people in debt who could end up on the streets in the near future.

Perhaps it is time for Christians to start seriously praying for the economy? What do you think?

See also Credit Crunches by Cross Rhythms' Mal Fletcher.

UPDATE: There is a fascinating money programme article which is linked to an episode this BBC series screened in November. Property: The End of the Affair basically argued that renting could be a lot more prudent than buying. Many first time buyers today can’t get a mortgage and feel they are missing out while others are desperate to hold onto their property ownership. Yet economically it could make a lot more sense for people in the UK to rent, as is the norm in many other countries, rather than buy – especially in the current financial climate. They argued that buying property could be just as risky as borrowing money to buy shares – which as we all know may keep falling.


David Rudel said...

My guess is that it will not be the most welcome view in the world, but here is my take on what Christians can take from the economic crisis.

I don't focus on blame, or economic mumbo-jumbo, but on what Christ might have to say about the silent philosophy behind the whole mess: The American Imperative to own your own house.

David Derbyshire said...

Thanks for your link and the following conversation in your comments. Interesting.

David Rudel said...

I wonder what is so different about the UK system that makes renting so expensive (as compared to the US.)

David Rudel said...

I just did a little investigation and found that things are distorted in the UK because there have been pretty much no new council houses built.

That caused people who would normally rent buy simply because there was a lack of rentable property...which caused home prices to go up, which caused people to feel an urgent need to buy their own house as early as possible...which caused home prices to go up even more.

A lady at answers said that at here place houses would cost about 160.000 while it costs 650/month to rent.

This supports my basic tenet that renting is cheaper than owning [on a per month basis] even in this case. It would cost 1123/month (approximately) in mortgage payments over the course of 20 years.

I don't know how the UK system works regarding taxes, but in the US there are extremely nice tax breaks for owning your own house, and even here it would not make up for that differential.

And in more 'normal' times [i.e. with higher interest rates], it would cost even more.

So, there are probably many people who pay less today in mortgage than they do for rent, but that is because they bought their homes before the houses/property values increased so much.

Ian White said...

Its certainly cheaper to rent here (Bradford), by quite a long way.

Maybe christians need to re-imagine a new and different future with a whole different set of rules, rather than just playing to our world's tune.

Have a commen purse? Pay off each others debts? Use our offerings to support local farmers, businesses etc.. that follow ethical practices rather than funding buildings and an ever growning number of people on staff?