Rightmove December, down as expected.

Really2

HAMISH_MCTAVISH wrote: »

Indeed.

And all because we dare to use real world examples to illustrate the obvious.....

Low rates are better than high rates for anyone with a mortgage amount greater than the cash in their savings accounts. Even if that mortgage is a very low income multiple, and the savings are in 6 figures.

I'd suspect most of the 12 million or so mortgage holders are in a similar position.

So whilst I can see why the renters would complain, high rates simply don't work well for most people of working age.

I don't think many can see past IR return on savings.

Savers are better off if IR is 3% and inflation is 1%.

But yet many savers would chose 15% IR and 17% inflation.

It is amazing how many only look at the return and not at the fact the may be losing money in real terms.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Low rates are better than high rates for anyone with a mortgage amount greater than the cash in their savings accounts. Even if that mortgage is a very low income multiple, and the savings are in 6 figures.

To be fair, probably be easier just to pay the mortgage off in that case, you know, as like, in real life?

HAMISH_MCTAVISH

DaddyBear wrote: »

By his own admission it takes 2 minutes to type an average post, probably takes a lot of thinking time to come up with elaborate BS.

2,000 x 2 = 4,000 / 60 = 66.67

Ok, so I rounded up to 70.

Well surely it didn't take you 2 minutes to come up with that garbage did it?

Harry_Powell

HAMISH_MCTAVISH wrote: »

I note you've still not answered these points....:rolleyes:

"So, what would it mean for investors if Bank rate stays low?

It doesn't mean house prices will boom. One reason to expect low rates is precisely that people will be unable or unwilling to take on the large debts necessary to push prices up.

Nor is it necessarily good for equities, because low Bank rate will be a response to the sluggish growth caused by weak lending and tight fiscal policy. It is, though, possible, that equities might get a lift if those firms that are able to borrow respond to the new environment of low interest rates by issuing debt to buy back shares - but I wouldn't stake much on this.

Instead, a likelier result will be that gilt yields will remain low; these do depend in part upon short rates.

And this leaves many of us with a problem. With a low Bank rate causing low expected returns on financial assets generally, our investment opportunities just won't be as good as they seemed to be a few years ago. If the worst comes to the worst - God forbid - some of us might have to keep working."

http://www.investorschronicle.co.uk/MarketsAndSectors/Markets/article/20090918/54f5ea44-a2b8-11de-acf8-0015171400aa/A-new-era-of-low-base-rates.jsp

So low interest rates are not good for savings, for equity investment or even, surprisingly, the housing market. Remember Hamish that the reason for the low interest rates you love are because the economy is knackered. Knackered economy = not many people willing to buy a house, not many companies doing well (and hence low dividends and share prices) and savings returning a low rate.

TBH hamish, I think you're full of crap. No one would build up a +£100k pension fund and not have a clue where it is invested. No one would build up +£100k in cash savings as a 'hedge against unemployment' yet have a £150k mortgage (I don't think many sensible people would keep £100k in pure cash). No one would have a house paid off (but not rented out) and another with such a high outstanding mortgage. It just doesn't make sense to me.

Before you go on about 'sour grapes', I do believe that there are people on here who are doing really well for themselves (bendix being one of them) and good luck to them, they're an inspiration to us all, however, I just don't believe you're one of them. Sorry.

DaddyBear

HAMISH_MCTAVISH wrote: »

Well surely it didn't take you 2 minutes to come up with that garbage did it?

No, because it was simple maths not VI BS.

HAMISH_MCTAVISH

Graham_Devon wrote: »

To be fair, probably be easier just to pay the mortgage off in that case, you know, as like, in real life?

Yes, but that would defeat the objective of having a cash cushion of a years joint income in case of unemployment or illness, wouldn't it?

I can picture the conversation now......

HM- Hi there bank manager, I'd like to borrow back all the money I used to pay off the mortgage.

Bank Manager- No problem Sir, just fill in this application form and put down your employment details.

HM- Sorry mate, lost the job and the wife got sick and can't work, so I've no way to pay it back.

Bank Manager- Alright then..... You won't be eligble, but have a nice day.

HM- But some bloke on the internet told me thats what people do in the real world, they use their emergency fund to pay down a mortgage. Something about Devonian Economic Theory???? Nice bloke, can't you just ask him?

Bank Manager- Look, you'll have to leave now or I'll call security.

:rolleyes:

Graham_Devon

HAMISH_MCTAVISH wrote: »

Yes, but that would defeat the objective of having a cash cushion of a years joint income in case of unemployment or illness, wouldn't it?

I can picture the conversation now......

HM- Hi there bank manager, I'd like to borrow back all the money I used to pay off the mortgage.

Bank Manager- No problem Sir, just fill in this application form and put down your employment details.

HM- Sorry mate, lost the job and the wife got sick and can't work, so I've no way to pay it back.

Bank Manager- Alright then..... You won't be eligble, but have a nice day.

HM- But some bloke on the internet told me thats what people do in the real world, they use their emergency fund to pay down a mortgage. Something about Devonian Economic Theory???? Nice bloke, can't you just ask him?

Bank Manager- Look, you'll have to leave now or I'll call security.

:rolleyes:

Oh ok. Sorry, I see the goalposts have changed.

I didn't realise savings "of six figures" was merely an emergency fund.

Silly me.

kabayiri

Hamish, without appearing to pick on you, I am curious on one question.

What is the long term prognosis for Aberdeen? Surely there must come a point when the income streams from oil start tailing off.

Harry_Powell

Graham_Devon wrote: »

Oh ok. Sorry, I see the goalposts have changed.

I didn't realise savings "of six figures" was merely an emergency fund.

Silly me.

A 'six figure' emergency fund to cover a £150k mortgage. If we do the sums, lets say a £150k mortgage on interest only would be £6k per year. Hamish would be unemployed for 20 years to require such a vast emergency pot.

Are you anticipating such a long lay off Hamish?

And to think most of us make do with 3 to 6 months emergency funds... :rolleyes:

Really2

Harry_Powell wrote: »

A 'six figure' emergency fund to cover a £150k mortgage. If we do the sums, lets say a £150k mortgage on interest only would be £6k per year. Hamish would be unemployed for 20 years to require such a vast emergency pot.

Are you anticipating such a long lay off Hamish?

And to think most of us make do with 3 to 6 months emergency funds... :rolleyes:

TBF your emergency fund should cover your wages for a set period not just your mortgage.

It's OK not worrying about house for 6 months but it's nice to eat and drink also.