A change in sentiment

pickles110564

poppy10 wrote: »

OK, that was an exagerration, but still, I would agree that the vast majority of the population believe that house prices always go up (more than wage inflation) long term. Even people who lived through the last crash, who should know better, have had all the "strong fundamentals" and "supply and demand" nonsense drummed into them so much that they repeat it like a mantra.

So let me get this right, after the last crash house prices did not go up?:rolleyes:

poppy10_2

pickles110564 wrote: »

So let me get this right, after the last crash house prices did not go up?:rolleyes:

They did go up - to an unsustainable extent. That's why they are coming back down. :rolleyes::rolleyes::rolleyes:

IveSeenTheLight

poppy10 wrote: »

[STRIKE]OK, that was an exagerration, but still, [/STRIKE]I would agree [STRIKE]that the vast majority of the population believe [/STRIKE]that house prices always go up [STRIKE](more than wage inflation)[/STRIKE] long term.

Modified above for my beliefs
House prices do always go up in the long term. The beuty is that when you buy a property, you secure that price for the long term as well (not that I am saying it is a good time to buy now )

Properties are normally / historically bought over a 25 year period
If a property was bought for 200,000 today, does anyone think it will be worth less in 25 years time. does anyone think that their wages will be less in 25 years time as opposed to what they are on today (assuming not retired )

Therefore generally, people find that as the duration of the mortgage goes on, it become easier to pay for that property

IveSeenTheLight

poppy10 wrote: »

They did go up - to an unsustainable extent. That's why they are coming back down. :rolleyes::rolleyes::rolleyes:

And they will go up again in time, higher to what they are now

moanymoany

There must be a lot of people who are not old enough to really remember the last crash. In their property owning life they have only seen rising house prices and low interest rates.

I know someone who was talking to a young mortgage guy at an EAs. This young chap told my friend that mortgage rates had never been higher than 6%! My friend who lived through the 15% years told him - his reply was that she must be mistaken!

Needless to say they went elsewhere.

IveSeenTheLight

moanymoany wrote: »

There must be a lot of people who are not old enough to really remember the last crash. In their property owning life they have only seen rising house prices and low interest rates.

I know someone who was talking to a young mortgage guy at an EAs. This young chap told my friend that mortgage rates had never been higher than 6%! My friend who lived through the 15% years told him - his reply was that she must be mistaken!

Needless to say they went elsewhere.

Black Wednesday, 16/09/92.
http://news.bbc.co.uk/onthisday/hi/dates/stories/september/16/newsid_2519000/2519013.stm

Chancellor Norman Lamont raised interest rates from 10% to 12%, then to 15%, and authorised the spending of billions of pounds to buy up the sterling being frantically sold on the currency markets.
But the measures failed to prevent the pound falling lower than its minimum level in the ERM. The second rise in the interest rate was reversed by the beleaguered chancellor soon after the withdrawal from the ERM, setting it at 12%.

Here's a graph og the UK base rate in the last 23 years


Interest at 5% on a 200,000 mortgage is 833 pounds
Interest at 10% on a 200,000 mortgage is 1666 pounds
Interest at 15% of 200000 mortgage is 2500 pounds

While it has happened in the past and may do so in the future, if interest rates rise to those levels again at present, I can foresee a host of protests, riots and anarchy by the general public.

I think it would impact a more sever credit crunch than we are seeing now.
Inflation would have to rocket and with it wages in order for people to survive.
Much like in the 70's where the interest rates were that high also

m00m00

IveSeenTheLight wrote: »

And they will go up again in time, higher to what they are now

beware of making long run economic predictions, Keynes had a thing to say about those.

pickles110564

poppy10 wrote: »

That's why they are coming back down.

So that they can go all the way back up again.;)

Pobby

IveSeenTheLight wrote: »

Black Wednesday, 16/09/92.
http://news.bbc.co.uk/onthisday/hi/dates/stories/september/16/newsid_2519000/2519013.stm



Here's a graph og the UK base rate in the last 23 years


Interest at 5% on a 200,000 mortgage is 833 pounds
Interest at 10% on a 200,000 mortgage is 1666 pounds
Interest at 15% of 200000 mortgage is 2500 pounds

While it has happened in the past and may do so in the future, if interest rates rise to those levels again at present, I can foresee a host of protests, riots and anarchy by the general public.

I think it would impact a more sever credit crunch than we are seeing now.
Inflation would have to rocket and with it wages in order for people to survive.
Much like in the 70's where the interest rates were that high also

Protest and riot, yea right, that was for us hippies in the 60s and 70s. If only. I`m afraid that too many of the population will be far more concerned about missing Big Brother rather than getting off their butts and doing something.

May be, just to a degree, similar inaction has got us to the place we are now.

Trollfever

...........................

:t