Typical wage £20K. Typical house £150K

nearlynew

skiTTish wrote: »

My god you're amazing ,you must be psychic to know me so well ?
Im so sorry I dont fit into one of your boxes !!

you really are a fool :rotfl:

............ Nice one.

pr1ck

carolt

Seriously, it is a very valid point.

Why precisely am I paying through my taxes to keep those too poor to pay the mortgage in their own homes?

Yet would get nothing from the taxpayer if I wanted to buy?

The discrepancy in the way that those who have already bought versus those who wish to buy are treated is nothing short of criminal.

Mr.Brown_4

Please allow me if I may to venture this thought. Housing crash postponed does not equal housing crash over. The market, along with other asset bubbles, has been propped up an artificial loosening of credit. Claimed by the government to ease the effects of recession it has also allowed the bubble to remain, only partially deflated. I suspect there is more pain, a double dip perhaps, yet to come.

Unrelated, but on the subject of Alexander I realise now I was mistaken.

the_ash_and_the_oak

Mr.Brown wrote: »

Please allow me if I may to venture this thought. Housing crash postponed does not equal housing crash over. The market, along with other asset bubbles, has been propped up an artificial loosening of credit.

Can you explain why its artificial?

wageslave

the_ash_and_the_oak wrote: »

Owner Occupancy stats show it is more of an option today than it was 40 years ago - credit has gotten cheaper and more easily accessible to a steadily growing proportion of society - increasing the capital price - if this pattern of the last 4 decades or so, of cheaper and more accessible finance, continues then this will be a big driver for prices, with increasing owner occupancy stats (in a way this is the strange thing, the higher the capital price - the easier to buy)

Cheap credit is meaningless if you have had to borrow upwards of five times your salary to finance the roof over your head.

Mr.Brown_4

the_ash_and_the_oak wrote: »

Can you explain why its artificial?

Perhaps artificial is not the right word. It is a very real loosening of normal economic rules. Here is a list.
1. Crazy low interest rates. Lowest since 1600 or something like that.
2. Billions, if not trillions of borrowings. Prudence thrown out of the window. Economic madness (or is it?)
3. Printing money. What a wonderful idea. Why didn't we think of it sooner? Like a remake of Willie Wonkas chocolate factory for the acid generation.

So by artifical I mean insane. Arguably.

the_ash_and_the_oak

wageslave wrote: »

Cheap credit is meaningless if you have had to borrow upwards of five times your salary to finance the roof over your head.

Think this needs unpacking. Lets for arguments sake create a situation where rates were fixed for the length of a 25 year mortgage - for the point of illustration, and someone on a 25k salary (lets make them 25 years old) and have two scenarios

i) they borrow 5 times salary (125k) and pay rates of 2%. They're paying 2.5k a year in interest, gradually coming down through the lifetime of the mortgage

ii) they borrow 2.5 times salary (62.5k) and pay rates of 8%. They're paying 5k a year in interest, coming down through the lifetime of the mortgage

What is intrinsically better about the 2nd situation in your opinion?

the_ash_and_the_oak

Mr.Brown wrote: »

Perhaps artificial is not the right word. It is a very real loosening of normal economic rules. Here is a list.
1. Crazy low interest rates. Lowest since 1600 or something like that.
2. Billions, if not trillions of borrowings. Prudence thrown out of the window. Economic madness (or is it?)
3. Printing money. What a wonderful idea. Why didn't we think of it sooner? Like a remake of Willie Wonkas chocolate factory for the acid generation.

So by artifical I mean insane. Arguably.

1. But these rates aren't actually available?
2/3. Is it insane? why? I don't doubt its going to open up a raft of problems down the line but what do you think would happen if it hadn't been done? And did you really see any democratically elected government not following this path.
3 again. We did think of it sooner - we have been printing money all along.

Mr.Brown_4

the_ash_and_the_oak wrote: »

1. But these rates aren't actually available?
2/3. Is it insane? why? I don't doubt its going to open up a raft of problems down the line but what do you think would happen if it hadn't been done? And did you really see any democratically elected government not following this path.
3 again. We did think of it sooner - we have been printing money all along.

I don't want to argue with one of the more distinguished members of the forum, but...

1. The rates must be available to someone otherwise there would be little point in it. It has artificially increased the amount of cheap credit which is inflating mini bubbles.
2. Get into trouble through borrowing. So borrow more rather than take the pain. Leading to more pain tomorrow. You are right - it's a benefit / downside of a democracy.
3. Printing money? QE? We have been doing it before? Well I have learnt something today. As well as Alexander of course.

Afriend_2

the_ash_and_the_oak wrote: »

Think this needs unpacking. Lets for arguments sake create a situation where rates were fixed for the length of a 25 year mortgage - for the point of illustration, and someone on a 25k salary (lets make them 25 years old) and have two scenarios

i) they borrow 5 times salary (125k) and pay rates of 4%. They're paying 5k a year in interest, gradually coming down through the lifetime of the mortgage

ii) they borrow 2.5 times salary (62.5k) and pay rates of 8%. They're paying 5k a year in interest, coming down through the lifetime of the mortgage

What is intrinsically better about the 2nd situation in your opinion?

I know this one. The capital part of the repayment is less. What do I win? :j

edit: if it's an interest only mortgage then the outstanding debt at the 25yr stage is less.