Is it Time to buy and secure a long-term fixed rate mortgage?

Dithering_Dad

wolvoman wrote: »

You haven't grasped my point at all.
RPI does not reflect house prices in any form at all. It includes mortgage costs against an arbitrary sum (which does not move in line with house price changes).

If the govt had used RPI instead of CPI it would have made no difference at all - nada.


If RPI included house prices, do you not think it would be in negative territory by now?
And don't you think in 2002ish when HPI was around 20% that RPI would have risen according high - it didn't.

Sorry wolvoman, you've lost me. Could you please include a link to support this, especially something that describes what mean by "mortgage costs as an arbitrary sum"?

EDIT: Done it for you:

Housing Costs in RPI:

Rent
Private furnished rent Private unfurnished rent
Local authority rent Registered Social Landlord (RSL) rent
Mortgage Interest
Average interest payments (estimated/modelled)
Depreciation
Depreciation costs proxy (price index for houses purchased with a mortgage)
Council Tax
Average council tax bills for households in Great Britain
Average rates bills in Northern Ireland
Water and Other Charges
Average water charges
Average sewerage and environmental charges
Repair and Maintenance Charges
Fees charged by plumbers, electricians, carpenters and decorators
Gas service charges
DIY Materials
Ready mixed filler Wallpaper
Wallpaper paste Paint
Varnish Paint brush
Various tools - eg hammer drill, screwdriver Aluminium ladder
Door handle Taps
Power point Shower head
Pieces of timber Ceramic tiles
Hire of domestic carpet shampoo/cleaner Woodscrews
Dwelling Insurance and Ground Rent
Dwelling insurance premiums of selected companies
Ground rent proxy (price index for houses purchased with a mortgage)

Logic dictates, to me anyway, that as Rental costs and Average Interest payments are factored into RPI and as property prices dictate rental costs and Interest Payments, then surely the RPI figures reflect house prices?

To go back to my previous post, if house prices increase 300% and pay increases 30%, then mortgages are obviously going to be much larger and therefore mortgage interest payments will be much larger. In 1995, my mortgage interest payments were £150, in 2005 my mortgage interest payments were £750. Why? not because the interest rate increased, but because my mortgage increased. Why did my mortgage increase? Because I bought a new house and house prices had increased.

scousethife

When someone calls you an a point you allways react with

I refuse to engage with them!

Translation - I cant argue that point so I will pretend I simply refuse too.

Come on when did you ever predict interest rates at or near .5%?

Its a simple question , and if you are claiming to be able to "read the market" then you must be able to prove you read interest rates dropping, a bit back.

You are offering up advice to people, well I'm sure people would love to see your advice is based on something.

scousethife

The "advice" in the first post, is saying buy now as interest rates will only go up.

Thats a bit like looking at an airoplane accelerating down a runway and saying the next place that plane will be is in the air.

Now to predict how high it will fly is alltogether another thing, and also to say where it will end up.............

Well that person would prove their worth, and add massive credibility to their statement.

And to add a really obvious joke the plane of course could just crash



like the houseing market is

Dithering_Dad

Bank of England banks on Inflation!!

This taken from a different MSE thread:

http://ftalphaville.ft.com/blog/2009...-on-inflation/

"In 2007-08 the Bank of englands pension fund made a surprising change to its investment strategy: a move from equity to gilts that massively outperformed other pension funds. Strange that.

It seems that it has now moved its money (from 25% to 70% in 2008) into index-linked gilts designed to withstand inflationary conditions."

With the housing drops seemingly slowing down, the BoE expecting high inflation and long-term fixed interest mortgage still available, isn't now the perfect time to buy a house ? (if you were considering buying on in the next 18 months to 2 years anyway).

StevieJ

DaveyDave wrote: »

I agree with what you have said but I would question whether the BoE would actually raise IRs to control CPI/RPI. It seems to me that the BoE have completely abandoned their remit to control inflation with interest rates - why would they lower IRs by 5% in less than a year when CPI is still way above their 2% target?. If they are willing to ignore this, why do you think that they would be forced to raise IRs in the future in response to heightened inflation?.

I'd be interested in people's views on this as I can't seem to make sense of it.

The BOE are supposed to set interest rates on what they perceive to be happening two years ahead. They perceive deflation to be the enemy over that timeframe irrespective of the current situation.

the_ash_and_the_oak

true...tho I feel they got a couple things wrong over the last few years imo