Surviving The Credit Crunch

12:29

juliansky:

Hi everyone - Julian here. I'll be hosting today's lunchtime debate.

Wednesday June 4, 2008 12:29 juliansky

12:30

Nic Cicutti:

Thanks Julian

Wednesday June 4, 2008 12:30 Nic Cicutti

12:30

juliansky:

Welcome to Nic Cicutti from http://money.sky.com

Wednesday June 4, 2008 12:30 juliansky

12:30

Nic Cicutti:

Pleased to be here

Wednesday June 4, 2008 12:30 Nic Cicutti

12:31

juliansky:

Nic - tell us a bit about yourself and what you do for Sky

Wednesday June 4, 2008 12:31 juliansky

12:31

Nic Cicutti:

I'm a financial journalist, I've been in the "business" for about 20 years, specialising in money. I write for Sky Money and am about to start a blog and also an Ask the Expert section

Wednesday June 4, 2008 12:31 Nic Cicutti

12:32

Nic Cicutti:

As with all so-called "experts", I don't always practice what I preach. But I do try...

Wednesday June 4, 2008 12:32 Nic Cicutti

12:32

Martin Stanford:

Hello from the unplugged studio in central London

Wednesday June 4, 2008 12:32 Martin Stanford

12:32

Nic Cicutti:

Hi martin

Wednesday June 4, 2008 12:32 Nic Cicutti

12:33

[Comment From SimonSkySimonSky: ]

Hiya, SImon from Sky here - I am producing Sky news Unplugged today - it starts at 1 pm here on Sky.com/news on the Live Events page

Wednesday June 4, 2008 12:33 SimonSky

12:33

[Comment From SimonSkySimonSky: ]

going to be talking about this very subject. Martin Stanford should be coming in any moment with our guests

Wednesday June 4, 2008 12:33 SimonSky

12:33

[Comment From SimonSkySimonSky: ]

who include two Freegans, who believe that as a society we throw away too much stuff.

Wednesday June 4, 2008 12:33 SimonSky

12:33

Martin Stanford:

we are going to be talking about how to beat the credit crunch in our live webcast at 1 today

Wednesday June 4, 2008 12:33 Martin Stanford

12:33

Martin Stanford:

join us on the events page just before 1!

Wednesday June 4, 2008 12:33 Martin Stanford

12:33

[Comment From derekderek: ]

i work in the steel business and have seen price increases daily. how long do you predict thease high prices?

Wednesday June 4, 2008 12:33 derek

12:33

juliansky:

Hi to the Unplugged Team!

Wednesday June 4, 2008 12:33 juliansky

12:33

juliansky:

Nic - can you answer Derek's question?

Wednesday June 4, 2008 12:33 juliansky

12:34

Nic Cicutti:

To be honest, I think they are likely to rise indefinietly. demand for both food and raw materials, which impact on each other, is insatiable - especially from China and India

Wednesday June 4, 2008 12:34 Nic Cicutti

12:34

Nic Cicutti:

Bad news, I know

Wednesday June 4, 2008 12:34 Nic Cicutti

12:36

Nic Cicutti:

The worry id thst thre fear of inflation then impacts on what the Bank of Engalnd decides to do about interest rates over here in the UK

Wednesday June 4, 2008 12:36 Nic Cicutti

12:36

Nic Cicutti:

Sorry about the typos, btw

Wednesday June 4, 2008 12:36 Nic Cicutti

12:36

[Comment From daviddavid: ]

is the credit cruch going to get worse before it gets better

Wednesday June 4, 2008 12:36 david

12:36

Martin Stanford:

I have a panel of expert guests... so if you have any comments about freeganism
or how to save money on your online purchases
ask away

Wednesday June 4, 2008 12:36 Martin Stanford

12:36

Nic Cicutti:

Unquestionably

Wednesday June 4, 2008 12:36 Nic Cicutti

12:37

Nic Cicutti:

On a personal basis, I'm a huge believer in recyling goods

Wednesday June 4, 2008 12:37 Nic Cicutti

12:37

Nic Cicutti:

I'm a member of Freecycle in my local area in North London and have given away lots of my things to people who can make better sue of it.

Wednesday June 4, 2008 12:37 Nic Cicutti

12:37

SimonSky:

In the Unplugged studio we also have Richard Yendall who is chair of the Online Loyalty Assocation - his business cashbackkingsis one of many online loyalty sites...

Wednesday June 4, 2008 12:37 SimonSky

12:38

SimonSky:

. Feel free to ask them questions

Wednesday June 4, 2008 12:38 SimonSky

12:38

Nic Cicutti:

I was going to say something about the credit crunch actually

Wednesday June 4, 2008 12:38 Nic Cicutti

12:39

SimonSky:

Go for it Nic!

Wednesday June 4, 2008 12:39 SimonSky

12:39

Nic Cicutti:

One of the things that I've discovered in the past few years is that many people have tended to spend money without thinking about it

Wednesday June 4, 2008 12:39 Nic Cicutti

12:39

[Comment From DarenDaren: ]

do you think we in a recession ?

Wednesday June 4, 2008 12:39 Daren

12:40

Nic Cicutti:

Hi Daren. Technically, a recssion is two monthtly quarters in a row where growth is negative.

Wednesday June 4, 2008 12:40 Nic Cicutti

12:40

Nic Cicutti:

So, no, not as such

Wednesday June 4, 2008 12:40 Nic Cicutti

12:40

[Comment From daviddavid: ]

gas and elec prices are going up again. why?

Wednesday June 4, 2008 12:40 david

12:40

Nic Cicutti:

Anyway, what I was going to say is that the cerdit crunch now raises serious questions as to how we can all spend less

Wednesday June 4, 2008 12:40 Nic Cicutti

12:41

[Comment From GordonGordon: ]

Hi all, I run a business credit check services for landlords and letting agents. We are seeing an increased volume of requests for tenant checks, probably due to the current credit crunch .... more looking to rent than buy?

Wednesday June 4, 2008 12:41 Gordon

12:41

Nic Cicutti:

Hi David,. the main reason - according to the utilities companies, is that the wholesale price of gas and oil has rocketed for them, by about 80% in the past year.

Wednesday June 4, 2008 12:41 Nic Cicutti

12:42

juliansky:

Interesting comment from Gordon Nic - what do you make of that?

Wednesday June 4, 2008 12:42 juliansky

12:42

Nic Cicutti:

Definitely more people looking to rent

Wednesday June 4, 2008 12:42 Nic Cicutti

12:42

Nic Cicutti:

The irony, of course, is that it helps to sustain the buy-to-let market

Wednesday June 4, 2008 12:42 Nic Cicutti

12:42

Nic Cicutti:

Rental yields are rising again -

Wednesday June 4, 2008 12:42 Nic Cicutti

12:43

juliansky:

So if rental yields rise - the buy to let mortgages won;t get any cheaper

Wednesday June 4, 2008 12:43 juliansky

12:43

[Comment From GavGav: ]

renting will get more expensive if people cant afford to move onto the housing ladder

Wednesday June 4, 2008 12:43 Gav

12:43

Nic Cicutti:

Not exactly Julian

Wednesday June 4, 2008 12:43 Nic Cicutti

12:43

Martin Stanford:

There are many bargains to be enjoyed in online shopping... here from one of my guests from cashbackkings.com - where you can earn money by spending money!

Wednesday June 4, 2008 12:43 Martin Stanford

12:43

Nic Cicutti:

Renting becomes more expensive partly because people who migth be able to afford to buy say they will wait instead

Wednesday June 4, 2008 12:43 Nic Cicutti

12:44

juliansky:

Aaah

Wednesday June 4, 2008 12:44 juliansky

12:44

Nic Cicutti:

First time buyers are also priced out of the market, but many have been so since last year

Wednesday June 4, 2008 12:44 Nic Cicutti

12:44

[Comment From GuestGuest: ]

I think that unless you are planning not to move for 10+ years buying now would be financial suicide. Hose prices at an all time high, and starting to go down, why would you take the risk?

Wednesday June 4, 2008 12:44 Guest

12:44

[Comment From PatrickPatrick: ]

I live in Leamington Spa where its impossible to buy at the moment

Wednesday June 4, 2008 12:44 Patrick

12:45

[Comment From GordonGordon: ]

I have been doing soem research on supply and demand for homes. It seems to me that housing supply will fall increasingly short of demand in the next 2/3 years ... causing hikes in rental yields

Wednesday June 4, 2008 12:45 Gordon

12:45

Nic Cicutti:

To be honest, I'bve always been against the notion that people should base a buying decision on whether a property rises or falls over a 3-2-year period

Wednesday June 4, 2008 12:45 Nic Cicutti

12:45

[Comment From davedave: ]

Hi, my fixed rate mortgage ends next June. Should I look to change now for the best on offer or wait till next year in the hope that things might improve?

Wednesday June 4, 2008 12:45 dave

12:45

Nic Cicutti:

I would wait, personally

Wednesday June 4, 2008 12:45 Nic Cicutti

12:46

Nic Cicutti:

A lot can happen ina year, while if you switch now you will end up paying a redemption penalty

Wednesday June 4, 2008 12:46 Nic Cicutti

12:46

[Comment From WayneWayne: ]

Hi All, I run an internet company and I am seeing no ill effects from the so called credit crunch. In fact our sales are consistently up on last year. Are we talking ourselves into a recession?

Wednesday June 4, 2008 12:46 Wayne

12:47

[Comment From Gordon -Credit-Check-SvcGordon -Credit-Check-Svc: ]

Name changed :-)

Wednesday June 4, 2008 12:47 Gordon -Credit-Check-Svc

12:47

Nic Cicutti:

What I was going to add about buying is that I've always done so on the basis of thre things: do I like the place, is it fairly priced and can I afford it. It's not speculation and I hate people who always talk about housing that way

Wednesday June 4, 2008 12:47 Nic Cicutti

12:48

Nic Cicutti:

Wayne, I think you may have a point

Wednesday June 4, 2008 12:48 Nic Cicutti

12:48

Nic Cicutti:

But in faireness, there is a seriius crisis as well

Wednesday June 4, 2008 12:48 Nic Cicutti

12:48

Nic Cicutti:

Back on housing, it's also the case that some sectors are unaffected

Wednesday June 4, 2008 12:48 Nic Cicutti

12:49

Nic Cicutti:

For example, if you're well off and can easily afford to buy a second home, why would you not do it?

Wednesday June 4, 2008 12:49 Nic Cicutti

12:49

Gordon -Credit-Check-Svc:

Nic .. we also need buy-to-let investors, to ensure supply of rental accommodation. So buying decisions for some will depend on other 'commercial' factors.

Wednesday June 4, 2008 12:49 Gordon -Credit-Check-Svc

12:50

Nic Cicutti:

True - and with the BTL market, there are different types of investo

Wednesday June 4, 2008 12:50 Nic Cicutti

12:50

[Comment From TerryTerry: ]

It appears to me that we've only just started hitting problems with the credit crunch and in fact it's only going to get significantly worse (what with living costs rapidly rising and the threat of recession coming). Do you think it's only a temporary blip or do you agree with me that it's going to get much worse?

Wednesday June 4, 2008 12:50 Terry

12:50

Nic Cicutti:

There are the "amateurs", with 2-3 properties who are probably scared as hell at the mo.

Wednesday June 4, 2008 12:50 Nic Cicutti

12:51

Nic Cicutti:

And the professionals, who see this as a buying market

Wednesday June 4, 2008 12:51 Nic Cicutti

12:51

[Comment From WayneWayne: ]

The crisis is only over the lack of borrowing money, surely there is enough already in the system if people use it wisely.

Wednesday June 4, 2008 12:51 Wayne

12:51

[Comment From paulpaul: ]

the recession is here.every one is in denial.i work in insurance and all the insurance companys are worried.how many pubs/restaurants,estate agents,insurance brokers etc are going bust!!!

Wednesday June 4, 2008 12:51 paul

12:51

Gordon -Credit-Check-Svc:

BTL needs some form of regulation, around 20% of properties have private landlords today!

Wednesday June 4, 2008 12:51 Gordon -Credit-Check-Svc

12:51

Nic Cicutti:

Terry, I agree with you. Things will get worse before they get better

Wednesday June 4, 2008 12:51 Nic Cicutti

12:52

Gordon -Credit-Check-Svc:

Terry, the whole issue with credit crunch is confidence

Wednesday June 4, 2008 12:52 Gordon -Credit-Check-Svc

12:52

Gordon -Credit-Check-Svc:

Once confidence returns so will money supply

Wednesday June 4, 2008 12:52 Gordon -Credit-Check-Svc

12:52

Nic Cicutti:

Paul also has a point. Things have a knock-on effect. For example, I was talking to a kitchen supplier today and he said his orders had dried up. I don't think it is just a question of confidence but of being able to get credit - and affording it

Wednesday June 4, 2008 12:52 Nic Cicutti

12:53

Nic Cicutti:

And I'm not sure that there will be a return to the days of easy credit for years

Wednesday June 4, 2008 12:53 Nic Cicutti

12:53

[Comment From LaurieMLaurieM: ]

With house prices rocketing and first time buyers priced out, it was always going to come to an end. Why is it such a surprise?

Wednesday June 4, 2008 12:53 LaurieM

12:53

Gordon -Credit-Check-Svc:

Any building related business will see a downturn ... less people buying property means less money spent on refurbs such as kitchens etc

Wednesday June 4, 2008 12:53 Gordon -Credit-Check-Svc

12:54

Nic Cicutti:

LaurieM, I don't think I'm surprised by the fact it's coming to an end. I guess I'm surprised that it has done so as a result of the US home lending crisis

Wednesday June 4, 2008 12:54 Nic Cicutti

12:54

Nic Cicutti:

I never really looked at what was happening over there

Wednesday June 4, 2008 12:54 Nic Cicutti

12:54

Gordon -Credit-Check-Svc:

LaurieM, agreed, UK proeprty cycle of boom-bust repeats itself and always will to some extent.

Wednesday June 4, 2008 12:54 Gordon -Credit-Check-Svc

12:55

Nic Cicutti:

but what has astonished me is that if we thought credit was too easy to obtain here

Wednesday June 4, 2008 12:55 Nic Cicutti

12:55

Gordon -Credit-Check-Svc:

Over the last 50 years proeprty boom-bust cycles have been 3 to 10 years ... there will be more

Wednesday June 4, 2008 12:55 Gordon -Credit-Check-Svc

12:55

Nic Cicutti:

What about over there? Mortgages of 12 times salary to people with debt problems? Mad!!!

Wednesday June 4, 2008 12:55 Nic Cicutti

12:55

[Comment From PaulSPaulS: ]

Isnt this whole situation being over hyped by the press? Are things REALLY that bad? It seems to me that all we are seeing is a correction which has come about because the banks got their fingers burnt through lending money recklessly. Surely it had to happen sooner or later?

Wednesday June 4, 2008 12:55 PaulS

12:56

Gordon -Credit-Check-Svc:

At the end of the day its about affordability ... people can only afford to pay so much for accommodation.

Wednesday June 4, 2008 12:56 Gordon -Credit-Check-Svc

12:56

[Comment From No more LabourNo more Labour: ]

I agree with you PaulS

Wednesday June 4, 2008 12:56 No more Labour

12:56

[Comment From BarryBarry: ]

I work within the Recovery and Reorganisation department of a firm of Chartered Accountants, over the past years credit has been to easy to obtain, thus people have been living outwith their means. Now there is not so much of a "credit crunch" just that credit is not as easy to obtain...people have to realise that they cannot always "keep up with the Jones's". Credit is still there if you can afford it !!

Wednesday June 4, 2008 12:56 Barry

12:57

Nic Cicutti:

Paul, to answer the last point first: yes, banks are partrly to blameAnd it is also true that some people will "feel" there is no crisis

Wednesday June 4, 2008 12:57 Nic Cicutti

12:57

Nic Cicutti:

That's because some people - who have excellent credit histories, good jobs and low levels of debt, will be unaffected

Wednesday June 4, 2008 12:57 Nic Cicutti

12:58

Gordon -Credit-Check-Svc:

BUT ... what is good credit history ?

Wednesday June 4, 2008 12:58 Gordon -Credit-Check-Svc

12:58

Nic Cicutti:

It's a Tale of Two Cities, in effect

Wednesday June 4, 2008 12:58 Nic Cicutti

12:58

Nic Cicutti:

Good question

Wednesday June 4, 2008 12:58 Nic Cicutti

12:58

Nic Cicutti:

It's obviously a lot better than a year ago!

Wednesday June 4, 2008 12:58 Nic Cicutti

12:58

Gordon -Credit-Check-Svc:

I had someone commit identity fraud in my name 5 yrs ago .. it has affected (wrongly) my credit history

Wednesday June 4, 2008 12:58 Gordon -Credit-Check-Svc

12:59

[Comment From WayneWayne: ]

The only crisis I see is young people who need to get there first mortgage cannot afford to borrow the money. So the rich get richer and the poor get poorer.

Wednesday June 4, 2008 12:59 Wayne

12:59

Nic Cicutti:

In my case, I'm unaffected. But I know of others in a similar situation to you who have been. Unfair? Probably

Wednesday June 4, 2008 12:59 Nic Cicutti

1:00

Nic Cicutti:

There's an argument that the credit crunch will equalise things by bringing down the price of properties.

Wednesday June 4, 2008 1:00 Nic Cicutti

1:00

juliansky:

So Nic - it's 1 o'clock - what's your top tip for surviving the current crunch?

Wednesday June 4, 2008 1:00 juliansky

1:00

Nic Cicutti:

Then, if young buyers can get a loan, thsy'll be better off

Wednesday June 4, 2008 1:00 Nic Cicutti

1:01

Nic Cicutti:

My top tip: spend wisely. use price comparsion websites for everything; insurance, shopping eetc. You camn save up to £1,000 a year that way. Good luck

Wednesday June 4, 2008 1:01 Nic Cicutti

1:01

SimonSky:

OK, hope you are now watching Sky News Unplugged over on the live events channel - let us know your thoughts here...

Wednesday June 4, 2008 1:01 SimonSky

1:03

juliansky:

Yup - time to handover to the Unplugged Team -Nic, thank you so much for joining us today. Get more of Nic's wisdom at http://money.sky.com

Wednesday June 4, 2008 1:03 juliansky

1:03

Nic Cicutti:

A pleasure

Wednesday June 4, 2008 1:03 Nic Cicutti

1:04

juliansky:

and if you'd like to stay chatting, please do! Watch Sky News Unplugged here: http://news.sky.com/skynews/livenewsevents

Wednesday June 4, 2008 1:04 juliansky

1:05

[Comment From PaulSPaulS: ]

I have to say that whilst I do not welcome the current situation, I think it may actually restore some sense to the housing market. I really do not understand the obsession in this country for owning your own home, particularly with issues such as inheritance tax and potentially being forced to sell your home if you have to go into care when you get old.

Wednesday June 4, 2008 1:05 PaulS

1:05

[Comment From rbrb: ]

this is london- we can always get money from somewhere

Wednesday June 4, 2008 1:05 rb

1:05

[Comment From BarryBarry: ]

I hope the banks and credit card companies appreciate the large part the have played in this so called "credit crunch". In relation to Nic's top tip, I agree that people should think about what they are paying and get the best deal. SHould they not be able to pay their debts they have to seek financial assistance and not bury their heads in the sand.

Wednesday June 4, 2008 1:05 Barry

1:05

[Comment From micrologicus.commicrologicus.com: ]

surely if people want to survive the credit crucnh they will need to look at ways to save money-

Wednesday June 4, 2008 1:05 micrologicus.com

1:05

Nic Cicutti:

Hi guys (& gals). I've got to dash to a meeting now, but really enjoyed this and would love to be invited back again. Apologies for the typos.

Wednesday June 4, 2008 1:05 Nic Cicutti

1:06

juliansky:

Bye Nic! :-)

Wednesday June 4, 2008 1:06 juliansky

1:06

Nic Cicutti:

Just quickly, for me the atraction of owning my home has been that I have the freedom to decorate and do ith it what I want and do things my way

Wednesday June 4, 2008 1:06 Nic Cicutti

1:06

SimonSky:

Thanks a lot Nic, pleasure hearing from you.

Wednesday June 4, 2008 1:06 SimonSky

1:06

[Comment From allyally: ]

buy biodiesil, save a fortune and gov tax!

Wednesday June 4, 2008 1:06 ally

1:06

Nic Cicutti:

Biodiesel smalls funny LOL

Wednesday June 4, 2008 1:06 Nic Cicutti

1:07

Gordon -Credit-Check-Svc:

Interesting comment from Barry. I agree that banks need to take more responsibility going forward, not over-lending with 125% mortgages etc. They were setting the scene for a credit crunch

Wednesday June 4, 2008 1:07 Gordon -Credit-Check-Svc

1:07

Nic Cicutti:

I have used it and it's like driving in a chip van

Wednesday June 4, 2008 1:07 Nic Cicutti

1:07

Nic Cicutti:

tara

Wednesday June 4, 2008 1:07 Nic Cicutti

2:59