Winners, Losers, etc

ruggedtoast

the_ash_and_the_oak wrote: »

If interest rates go up then how is this a continuation of a policy to encourage people into debt?

I think they'll protect people who are in debt, providing this supports house prices.

I'm not sure it'll work, its enormously unfair on those who have saved, and it doesnt make any sense - but the government has no intention of building social housing or forcing the banks to repossess en masse.

the_ash_and_the_oak

ruggedtoast wrote: »

I think they'll protect people who are in debt, providing this supports house prices.

I'm not sure it'll work, its enormously unfair on those who have saved, and it doesnt make any sense - but the government has no intention of building social housing or forcing the banks to repossess en masse.

If they are going to support people in debt at the same time as interest rates rise for future potential buyers rise doesn't this imply not only difficulty to buy but also to sell?

And what are the immediate gains of mass repossessions in your view?

ninky_2

Cleaver wrote: »

Sometimes, my dear Trealiac, I just can't help thinking that there are too many people in this world worrying about their cake bases. Have I got slightly too many eggs? Will it rise? Shall I cook it now or tomorrow? Will the world run out of flour? Just get your base sorted and concentrate on the fun stuff. Your base will be fine.

If anyone has any idea what I'm talking about please do let me know.

your posts have put a little more icing on my cake today and maybe a cherry too cleaver.

that said, i'm looking for an egg-free and wheat-free recipe for my base as i'm a bit intolerant to the generic cake ingredients.

ruggedtoast

the_ash_and_the_oak wrote: »

If they are going to support people in debt at the same time as interest rates rise for future potential buyers rise doesn't this imply not only difficulty to buy but also to sell?

And what are the immediate gains of mass repossessions in your view?

The banks are turning into zombie banks - state supported monoliths only remaining solvent on paper due to loans that will never be paid off secured against assets that arent worth what was paid for them.

This isnt like the 80s with rocketing inflation, unemployment and double digit interest rates. All of these things have been low and there are still many borrowers who cant meet their payments.

the_ash_and_the_oak

ruggedtoast wrote: »

The banks are turning into zombie banks - state supported monoliths only remaining solvent on paper due to loans that will never be paid off secured against assets that arent worth what was paid for them.

You could argue that this is kinda the case at all times (if everyone tried to sell their assets at the same time) - in which case preventing forced sales is a way of avoiding realizing a loss?

But this isn't really answering the question of what benefit you see from a policy of mass repossession?

fedupfreda

the_ash_and_the_oak wrote: »

Lets go back to the example of buying in 2000 and selling in 2007. Lets say they bought for 180k and sold for 400k. They are now in possession of 220k (minus selling costs) even if they never paid a penny off the mortgage

QUOTE]
In that particular case, they would have made a net gain. However, it's not always quite as simple as that - statistics can be confusing !

Lets take my own personal case as an example:-

Three bed mid terrace. Bought 1993 @ £45k
In 2007 (height of boom) comparable houses in the street were going for £180k.
We could have sold and made £130k 'profit', after costs were taken into account.

However we would still have needed somewhere to live. In 2007 the one bed starter houses in our area were going for £140k.:eek: Even if we had downsized - we would have suffered a net loss of £10k - hence we stayed put. Had we moved to the other end of the country - we would not have made any gain as by then any other house would have been a similar price.

To go back to your original example - your theoretical buyers would, indeed, have made a nominal profit of £220k. However its likely all the other houses in the area would have gone up a similar amount - they would have had to move quite some distance away from their original location to buy a property outright at those prices. If they had moved into my street and bought a house for £180k, they would have ended up with about £40k over. Still a considerable sum - and I certainly wouldn't turn my nose up at it - however IMO not really enough to invest and live the rest of your life off the interest, which is certainly what a lot of people were hoping.

I am not disputing that some people have certainly made gains. However I feel the gains are not always as quite as large as they are made out to be.

the_ash_and_the_oak

fedupfreda wrote: »

Lets take my own personal case as an example:-

Three bed mid terrace. Bought 1993 @ £45k
In 2007 (height of boom) comparable houses in the street were going for £180k.
We could have sold and made £130k 'profit', after costs were taken into account.

However we would still have needed somewhere to live. In 2007 the one bed starter houses in our area were going for £140k.:eek: Even if we had downsized - we would have suffered a net loss of £10k - hence we stayed put.

Houses were 180k and flats 140k?

Lets look at it this way. I'm presuming you're mortgage free? If you hadn't bought in 1993 but had rented throughout that period would you have saved enough to be a cash buyer of a 180k house in 2007? What would be your current situation if you hadn't had bought at that time?

I know you say they then need to buy another place (or rent) but this is also the case for someone who didn't own and has to do the same...without the gains from previous HPI

fedupfreda

the_ash_and_the_oak wrote: »

Houses were 180k and flats 140k?

Lets look at it this way. I'm presuming you're mortgage free? If you hadn't bought in 1993 but had rented throughout that period would you have saved enough to be a cash buyer of a 180k house in 2007? What would be your current situation if you hadn't had bought at that time?

I know you say they then need to buy another place (or rent) but this is also the case for someone who didn't own and has to do the same...without the gains from previous HPI

3 bed houses were 180k (ex council, that is. On the private estate across the road - 220k plus. One bed cluster homes on the same private estate were £140k).

My current situation? I would probably have been living in exactly the same sort of house as I am now, as this is an ex-local authority 3 bed mid terrace. (I hasten to add it was ex-LA 4 owners before me, in case anyone wonders, so I didn't get any benefit from that either...)

No, I am not mortgage free. Still paying an underperforming endowment - never had the income to be able to increase the payments. Had I been renting througout that time it would, indeed, have been money down the drain. However, had I been renting I would not have gone without heating for 3 months while I was struggling to drum up the money to get the whole central heating system replaced - it would have been the landlords job! Sometimes I think I would have been better off not buying at all.

I am not disputing the fact that there have been some extremely lucky people who have made a small fortune. However not everyone who has bought has been so lucky. In order to realise the profit from an asset you have to be able to sell high and buy low. That's becoming increasingly more difficult these days.

the_ash_and_the_oak

fedupfreda wrote: »

My current situation? I would probably have been living in exactly the same sort of house as I am now, as this is an ex-local authority 3 bed mid terrace. (I hasten to add it was ex-LA 4 owners before me, in case anyone wonders, so I didn't get any benefit from that either...)

If you were to sell, and rent now, you would presumably have 140k in your back pocket which came directly from HPI - if you had rented the whole time presumably you wouldn't have this 140k? Isn't that the gain you've had from HPI?

kriss_boy

I just day dream about the future to be honest.

My friends and I are all in our mid to late 20s and inevitably one by one we'll start settling down. I'd like to think that 2/3 years down the line we are all still sociable and sadly to me that means my girlfriend and I having a bigger house so we can throw the odd BBQ or shin dig.

A few of my mates are now married! Some even have kids! Very scarey indeed!