The property boom is well underway now.

Conrad

Thrugelmir wrote: »

From those who know nothing else, and have yet to feel the full cold winds of what a recession actually means.

And what did those cold winds in the 90's bring? Less than 1% repossessed.

Why default to the extreme ends of things were people get burned. Why not focus on the millions that benefit!:D

Conrad

Harry_Powell wrote: »

Plenty of rampant bears on here who are desperate to buy. The love affair continues into the next generation - even though it might be tough love.

Bears are mentally attuned to the 'hear n now'. They seriously think the love affair with shelter is over, when mankind is merely in it's infancy with say a billion years to go!

chucky

Thrugelmir wrote: »

Seems that the major lenders are hedging their loan books back to 3 - 3.5 times salary income.

I'm sure most people want interest only mortgages. This type of lending has a made a major contribution to the funding hole that has developed since 2003. Hopefully means of capital repayment will be high on the agenda of the FSA as will only create more problems in the future.

oh dear... unless you have a good deposit it seems that there's going to be some disappointed people that are hoping to buy :eek:

Really2

Thrugelmir wrote: »

rising age of FTB's etc.

I thought the average age has dropped 4-5 years in the last 3 years? (currently somewhere between 27 and 30 depending on where you live)

Harry_Powell

Graham_Devon wrote: »

Hello there

Slightly different as I only own a percentage. But that's exactly what I am doing.

I want to be mortgage free ASAP, without being silly about it. Not doing as you have suggested. Have seen how having a mortgage at 60 can drag people down.

If you had worked your way up to a 5 bed detached home in a nice area with interest only mortgages over the last 30 years, you'd now be able to downsize to a 2 bed stone cottage and be mortgage free without having made a single capital repayment.

I read on here about one guy who had bought a 3 bed terrace about 30 years ago and paid it off using the MFW strategy. While he sat in his low value house his mates carried on up the ladder riding the HPI train. The bloke was ruing the fact that his mates had gained far more via HPI than he had by overpaying. Plus their families weren't all crushed into a home that was really too small for them, plus he couldn't utilize the tax efficiency of downsizing as he was already in an entry-level house.

Kohoutek

How do all the property experts see this panning out?

Council_of_Mortgage_Lenders wrote:

At the moment we cannot see how to square the circle between increasing demand for housing, constraints on the necessary finance to deliver it, the repayment of £300 billion of lending support between 2011 and 2014, and reductions in public spending as the fiscal deficit is addressed. And all of these features apply at a time when more people are going to need housing help.

http://www.cml.org.uk/cml/media/press/2572

Jonathan Pierce, from Credit Suisse, believes UK banks will have to reduce the size of their balance sheets by as much as £530bn over the next three to four years to meet new regulations.

According to his analysis, British banks need to issue £420bn-£750bn of long-term wholesale funds. "We don't think this is plausible and hence we expect balance sheet footings to fall by 6pc-18pc to compensate," he said. He predicts a minimum reduction in credit of £200bn.

http://www.telegraph.co.uk/finance/economics/7409166/New-credit-crunch-risk-as-banks-face-funding-crisis.html

Mervyn King has made it clear he will not be extending this scheme, and I somehow doubt the next government will have a lot of spare money lying around.

Harry_Powell

Conrad wrote: »

Bears are mentally attuned to the 'hear n now'. They seriously think the love affair with shelter is over, when mankind is merely in it's infancy with say a billion years to go!

They don't seem to see the oxymoron of stating that the love affair with property is over, yet spending most of their day on a forum talking about property.

Graham_Devon

Harry_Powell wrote: »

If you had worked your way up to a 5 bed detached home in a nice area with interest only mortgages over the last 30 years, you'd now be able to downsize to a 2 bed stone cottage and be mortgage free without having made a single capital repayment.

That's all fine, and true.

However, I didn't have that chance. Neither did you. We are not old enough. And those that are old enough, have probably found themselves in that situation through accident, not through planned foresight.

The difference between myself and yourself is that I do not see how prices can rise at the levels we have seen to enable what you have described again.

You see properties rising at a rate which will enable you to do such a thing.

For me though, wha tyou have described sounds nice, but one problem in life can see you lose the lot. If I pay my mortgage off, or pay as much as possible off, one problem in my life doesn't end up with me losing the lot.

So I may be making capital payments, but I could, if I really needed to, sell up and take my money out, whatever is left...even in a downturn.

In your scenario, the person is completely stuck. May or may not be able to sell up dependant on the equity (if they have any), and if they do sell up, may have lost everything in the process on this 30 year ladder you talk of.

I guess it depends on what your attitude to risk is.

Personally, would rather just have a 3 bed, owned house over a 5 bed house which I have no choice but to keep working for. Not that there is anything wrong in what you describe....just relies on everything working out.

Maybe that's why I'm a bear. I just want to pay for my home, and then enjoy life. I don't want to have to keep dragging my butt out of bed every morning to attend this wretched hell we call working just to survive. And thats what your plan relies on everyone to keep doing. Ever extending themselves.

For me, it's pay off the house as soon as practically possible. Build up some savings. Get on the golf course. The less time I can spend in a metal box travelling to work in my one life, the better.

Really2

Graham_Devon wrote: »

Personally, would rather just have a 3 bed, owned house over a 5 bed house which I have no choice but to keep working for. Not that there is anything wrong in what you describe....just relies on everything working out.

Maybe that's why I'm a bear. I just want to pay for my home, and then enjoy life. I don't want to have to keep dragging my butt out of bed every morning to attend this wretched hell we call working just to survive. And thats what your plan relies on everyone to keep doing. Ever extending themselves.

TBF if you paid the same IO as you did repayment there is no actual difference, you still have to service the debt the same.
Just that one the debt is slightly decreasing over time.

Thrugelmir

Conrad wrote: »

Thats a very dated outlook.

I have I/O as does my charterred accountant. We know exactly what we're doing.

Allowing a lender to be in charge of your capital repyment schedule is for the real numpties.
Most clients here expect chunky inheritance - ok it might not come off - it's only an added cherry but worth mentioning.

Also you overlook the fact a lot of people have more than one property so the I/O route is perfectly suitable.

We need to forget the past pension and c&i model - totaly outdated now for many of us. Vince Cable will perhaps cotton onto this one day;)

Outdated? The consequences are here today for many.

Your chartered accountant is not a typical average borrower, on an average wage. His remuneration will be a share of profits rather than a fixed salary. So yes, i/o is suitable in this case.

Numpty is an interesting choice of word for the majority of mortgage holders in this country. So I won't bother responding to that.

Not totally in tune with Vince Cable myself. Good common sense economist but lacks business experience.

As I've said on many occassions in the past 15 months. Interesting and potentially difficult times ahead in the medium term. Ignoring the facts is at ones own peril.