Get ready for rates to rocket

chucky

julieq wrote: »

Why is it rubbish, Mewbie?

Explain and argue your case please.

he's unable to unfortunately

julieq wrote: »

House prices can and do increase when rates rise. Again, simple verifiable fact. Rates will tend to rise when there is inflation, usually the intention of the rise is to arrest the inflation to a sustainable level, not to create deflation.

not that i had to tell you but you're right house prices do rise when interest rates rise
http://www.investment-property-financing.co.uk/correlation-of-indices.html

as you say the only thing mortgage rates do is try to put money in or out of the economy - it doesn't always have the desired effect, you can add inflation in there too.

Graham_Devon

julieq wrote: »

I do think that when people focus on capital value they lose track of the subisidiary, valuable, benefit of a house, which is that you can live in it. They are unusual asset classes in that sense.

Oh come on.

You can only do that if you can afford to pay for it!!!

julieq

But someone has to pay for it Graham. If you rent, you're paying a landlord a margin. If you rent into retirement you're well and truly ph00ked to be honest.

It's not like an equity investment where you can choose to hold it or not depending on whether you want to take the risk, you have to live somewhere so you're obliged to pay one way or another. If you don't want to bear the risk of holding the asset yourself, you will pay a premium somewhere along the line to have use of it.

You said earlier we were talking about now. We're not: we're talking about speculation into the future. Rate rises will be in the future, further price falls will be in the future. My argument is that the doomsday scenarios need events that don't seem to have any particularly logical basis, you can't say they won't happen, but they're not highly probable.

mewbie_2

julieq wrote: »

Why is it rubbish, Mewbie?

Coz I say so.

julieq wrote: »

Explain and argue your case please. So far we've had an ad hominem based on you being wrong about what 8 fold means, and an insult based on the Daily Mail, which I don't read anyway.

Who are you? My old school teacher? You might enjoy the Mail.

julieq wrote: »

I think I've argued my position clearly. You don't have to agree with it, but if you don't, set out the reasons that lead you to your conclusion and the assumptions you make to get there.

You have argued clearly. And you are clearly wrong.

But I can't be bothered to go into detail, that's for others. I'm more of an ideas person. Less work you see.

Graham_Devon

julieq wrote: »

But someone has to pay for it Graham. If you rent, you're paying a landlord a margin. If you rent into retirement you're well and truly ph00ked to be honest.

You appear to be missing what I am saying.

If you cannot afford to pay for the house, the "benefit of owning" the house is completely wiped out, nonsensical, no benefit.

Someone has to pay for it, I agree. But, not those who cannot.

It's worth remembering we have an increasingly large section of society reliant on the government to pay ther rent / mortgage interest. So your "obliged to pay for it" because you have to live somewhere, as a reason for prices to stay high etc, is flawed from the very start.

As for if you rent into retirement you are well and truly phooked, I entirely and wholly disagree. You will get your rent paid for you and then free care.

lostinrates

Graham_Devon wrote: »

Where the hell do you all get massive wage increases from?! It's an argument I can not, in any way, comprehend.

If I return to work, for myself, I would only expect my wage to increase, if t all, with rate of inflation and thats counting on ''success''. However, DH had a 12.5% salary increase this year, if reatined after March will have a 52% (I think) salary increase, and the year after all though the percentages become smaller, the amounts mean the changes are still ''significant''. I'm yet to calculate the effect of tax rate just in to the 50% bracket which will doubtless have significnat impact on the benefits of these increases for a time. At certain stages of his career there will be other ''big'' jumps in salary.

To ignore this sort of wage increase happens is not right and ignores the pattern of housing many city based professionals experience and inpacts on their timing to buy/sell significantly

To pretend it apples to larger groups than it does is very dangerous: and I think where it becomes harder for certain types of professional to identify with the grinding slog of no/inline with inflation wage increases and the impact of that on property decisions/practicality.

Graham_Devon

lostinrates wrote: »

If I return to work, for myself, I would only expect my wage to increase, if t all, with rate of inflation and thats counting on ''success''. However, DH had a 12.5% salary increase this year, if reatined after March will have a 52% (I think) salary increase, and the year after all though the percentages become smaller, the amounts mean the changes are still ''significant''. I'm yet to calculate the effect of tax rate just in to the 50% bracket which will doubtless have significnat impact on the benefits of these increases for a time. At certain stages of his career there will be other ''big'' jumps in salary.

To ignore this sort of wage increase happens is not right and ignores the pattern of housing many city based professionals experience and inpacts on their timing to buy/sell significantly

To pretend it apples to larger groups than it does is very dangerous: and I think where it becomes harder for certain types of professional to identify with the grinding slog of no/inline with inflation wage increases and the impact of that on property decisions/practicality.

To igore the fact that the insane wage rises you are talking about, limited to your husbdand, is nothing like what the rest of the country is facing for the next few years, is also, dangerous.

I'm talking about everyone. Not just specific people. I can not, in any way see wage rises of 12.5% for the populus any time soon.

lostinrates

julieq wrote: »

But someone has to pay for it Graham. If you rent, you're paying a landlord a margin. If you rent into retirement you're well and truly ph00ked to be honest.

Rubbish (unlike the majority of what you write). If you rent below a certan threshold you get help and will have entitlememt to certain types of housing, if you rent and have made provison wth other investment decisions/pension planning you are fine too.

julieq

If you're within the safety net you'll get benefits, but you're unlikely to have the choices your erstwhile next door neighbour with savings and a mortgage free house will have, even if at one point in the cycle they'd made a big paper loss. If you have savings and a private pension you're unlikely to get anything much more than that, someone renting into retirement to build a better retirement is in for a large and unpleasant shock when they find out they don't get their rent paid. Local authority care (for the small percentage of people who need it) isn't great incidentally. I stick by my original word.

Most people can afford rent if they're in employment. Most people are in employment. In effect you (and your peers) smooth out the periods where you can't afford rent by the taxes you (and they) pay when you can. It's just the goverment holds the cash for you as a form of collective insurance.

You do end up paying for where you live, and if you want to choose where you live you pay more. That's market economics basically.

lostinrates

Graham_Devon wrote: »

To igore the fact that the insane wage rises you are talking about, limited to your husbdand, is nothing like what the rest of the country is facing for the next few years, is also, dangerous.

I'm talking about everyone. Not just specific people. I can not, in any way see wage rises of 12.5% for the populus any time soon.

As I rather say, don't you think?