The Recession, ten years on: how are we affected?
The recession, ten years on: how are we affected?
The recession began as just another financial crisis on Wall Street. There was an issue with subprime mortgages in America—mortgages given to people who looked to be high-risk lenders, with difficulty maintaining a repayment schedule—which became a bigger and bigger issue as more and more people defaulted on their mortgage. Wall Street had accepted this higher risk, but it was unsustainable. Lehman Brothers, the investment bank, collapsed because of these problems, problems which continued across the globe.
The UK bank, Northern Rock, was caught in the crossfire due to their practice of heavily using the international money markets. When this became known, customers of the bank flocked to take out their savings. Known as a bank run, this essentially drained Northern Rock of its assets and turned it from a healthy company in the morning to one that was facing bankruptcy by the day’s end.
Across the world, countries fell prey to the credit crunch, now recognised as one of the worst recessions since the Great Depression of the 1930s. many were affected, Companies were reluctant to employ new staff, employees were reluctant to accept redundancy, wages stayed stagnant, and the cost of living shot up.
It’s not been an easy road to recovery. The UK government’s insistence on austerity has recently become an unpopular one, quality of living for many have dropped and more and more families becoming reliant on food banks. Mid way through recovery the UK voted to leave the European Union, a move which to date has yet to see benefits, a decision which could throw finances into disarray when the UK officially leaves.
Lord Aidar Turner, who was head of the UK Financial Services Authority between 2008 – 2013, worries that not enough has changed. Speaking to the Sydney Morning Herald, he warned that the world has not learned from the problems that lead to its problems the first time. Problems like debt overhang, where people and countries are so in debt they can’t borrow any more, are still rife. So much do, the Banks are having to sell on their non-performing loan portfolios in order to recover some if the debt owed.
Recently, AIB is reported to be set to push the button on what they are calling Project Pine. Project Pine is a €300million sale of non-performing loans secured on assets in Britain and Northern Ireland.
To read more on this recent AIB loan sale follow: https://www.businesspost.ie/business/aib-offload-e300-million-non-performing-loans-397495
Or Read our blog on a previous AIB loan sale and how we can help: https://www.bellcomp.co.uk/blog/aib-loan-sale/
Since the downfall of the markets, in real terms, levels of unemployment have gradually decreased in the ten years since the financial crisis began. Wages have slowly risen, though so has the cost of living which means there is still a gap. House prices have risen, but not to the levels seen pre 2007 and though a lower amount of new houses are coming onto the market people are still wary of taking on a new mortgage and expose themselves to more the risk.
Overall, Debt is still an issue. Even though short-term lenders like Wonga and QuickQuid have been handed new sanctions, debt shows no signs of slowing down. Something which needs to be addressed.
If you are finding yourself in a difficult position due to unaffordable mortgage repayments, the possibility of repossession or fear your mortgage has been sold to a Vulture fund then speak to us today.
We are experts in working with those who are in financial difficulty due to property Debt related issues. Covering Ireland UK and several countries in Europe, our experts have a wealth of knowledge and can negotiate on your behalf to find solutions suited to your situation.
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