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Debate House Prices
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Why are people pleased about rising house prices?
Cassandra_W
Posts: 22 Forumite
I just don't get it. Do the UK public really think that debt is wealth?
Anyone selling a house and moving to a larger one that thinks they have made some money, should do a simple calculation.
Work out the percentage increase between the purchase and sale price of the house you are selling. This is your "profit". Then apply the same percentage as a decrease to the house you are buying as this will have also increased in price. You will find that you haven't made a profit - you just have more debt to service on the house you are buying.
e.g. Bought 100k sold 150k looks like 50k or 50% profit due to HPI. However if buying at 240k, minus the same 50% HPI the house would only have cost 160k . Therefore with HPI your gap is now 90k (240-150) but without HPI would have been only 60k (160-100).
That's where the bankers have got their bonuses. That’s an extra £30k onto the mortgage. Larger mortgages mean more interest to pay. The financial sector has pulled off the ultimate con - joint income mortgages. Now two people instead of one, have to work to pay a mortgage - and the strange thing is that those people think THEY are wealthy doing it. In reality it’s just more debt to service. The second income is going straight into some banker’s pay packet. Ask yourself two questions. Did your mother have to work to pay the mortgage? Did bankers get such large bonuses in the past? The answers are “No” and “No” and those answers are connected as one is paying for the other.
Even older people who have paid off their mortgage and are downsizing haven’t made as much money as they might think. The long term average mortgage rate is 6%. On a 25 year mortgage this practically doubles the amount of money paid for the house. For example on a £100k mortgage the total paid is £193k. The house has to double in price just to cover the interest. Don’t forget that all the time you are paying a mortgage you are giving your bank your money to speculate with and make more money for themselves. If you invest your money wisely you could have had the return on it instead.
The only people who really benefit from HPI are those rich enough to pay cash for their purchase. They do not have the debt to service. Anyone who cannot pay cash is merely putting money into the pockets of the already wealthy by pushing house prices up, so the wealthy can sell at a profit without knocking off the cost of servicing any debt. Did Margaret Thatcher bring in the right to buy council houses to help poor people or saddle them with lots of debt to push up property prices for the rich?
Interest rates are at a record low for a reason. The government wants people to think that buying is cheaper than renting, to keep the housing pyramid scheme going. The government owns plenty of RBS and Lloyds – so they are now bankers. However as interest rates rise, as they will (and quickly and highly if the UK does not improve it’s debt situation) renting will again be much cheaper and provide mobility. As well as being bankers the government must love HPI and the gullibility of those people duped by it. Ask yourself why they haven’t prevented joint income mortgages? The answer is that if two incomes are needed to pay a mortgage, that is two lots of income tax – no wonder MP expenses were so high, with all that extra revenue coming in.
Anyone selling a house and moving to a larger one that thinks they have made some money, should do a simple calculation.
Work out the percentage increase between the purchase and sale price of the house you are selling. This is your "profit". Then apply the same percentage as a decrease to the house you are buying as this will have also increased in price. You will find that you haven't made a profit - you just have more debt to service on the house you are buying.
e.g. Bought 100k sold 150k looks like 50k or 50% profit due to HPI. However if buying at 240k, minus the same 50% HPI the house would only have cost 160k . Therefore with HPI your gap is now 90k (240-150) but without HPI would have been only 60k (160-100).
That's where the bankers have got their bonuses. That’s an extra £30k onto the mortgage. Larger mortgages mean more interest to pay. The financial sector has pulled off the ultimate con - joint income mortgages. Now two people instead of one, have to work to pay a mortgage - and the strange thing is that those people think THEY are wealthy doing it. In reality it’s just more debt to service. The second income is going straight into some banker’s pay packet. Ask yourself two questions. Did your mother have to work to pay the mortgage? Did bankers get such large bonuses in the past? The answers are “No” and “No” and those answers are connected as one is paying for the other.
Even older people who have paid off their mortgage and are downsizing haven’t made as much money as they might think. The long term average mortgage rate is 6%. On a 25 year mortgage this practically doubles the amount of money paid for the house. For example on a £100k mortgage the total paid is £193k. The house has to double in price just to cover the interest. Don’t forget that all the time you are paying a mortgage you are giving your bank your money to speculate with and make more money for themselves. If you invest your money wisely you could have had the return on it instead.
The only people who really benefit from HPI are those rich enough to pay cash for their purchase. They do not have the debt to service. Anyone who cannot pay cash is merely putting money into the pockets of the already wealthy by pushing house prices up, so the wealthy can sell at a profit without knocking off the cost of servicing any debt. Did Margaret Thatcher bring in the right to buy council houses to help poor people or saddle them with lots of debt to push up property prices for the rich?
Interest rates are at a record low for a reason. The government wants people to think that buying is cheaper than renting, to keep the housing pyramid scheme going. The government owns plenty of RBS and Lloyds – so they are now bankers. However as interest rates rise, as they will (and quickly and highly if the UK does not improve it’s debt situation) renting will again be much cheaper and provide mobility. As well as being bankers the government must love HPI and the gullibility of those people duped by it. Ask yourself why they haven’t prevented joint income mortgages? The answer is that if two incomes are needed to pay a mortgage, that is two lots of income tax – no wonder MP expenses were so high, with all that extra revenue coming in.
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Comments
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Quids in. I agree. Its the renters who are looking a bit sad for themselves. Best thing I ever did was buying this shared equity place. Even if they drop I'll still be laughing. Doctor says it's dementia but what does he know. He lives in a rental - lol.Cassandra_W wrote: »e.g. Bought 100k sold 150k looks like 50k or 50% profit due to HPI. However if buying at 240k, minus the same 50% HPI the house would only have cost 160k . Therefore with HPI your gap is now 90k (240-150) but without HPI would have been only 60k (160-100).0 -
Cassandra_W wrote: »
Even older people who have paid off their mortgage and are downsizing haven’t made as much money as they might think. The long term average mortgage rate is 6%. On a 25 year mortgage this practically doubles the amount of money paid for the house. For example on a £100k mortgage the total paid is £193k. The house has to double in price just to cover the interest. Don’t forget that all the time you are paying a mortgage you are giving your bank your money to speculate with and make more money for
You could always pay rent for the 25 years0 -
Cassandra_W wrote: »Interest rates are at a record low for a reason. The government wants people to think that buying is cheaper than renting, to keep the housing pyramid scheme going. The government owns plenty of RBS and Lloyds – so they are now bankers.
Thats news to me. I've wondering for months what's been going on.
I was worried that we may be in a reccession , a global economic downturn. Though obviously not. Phew! That's one less thing to worry about.0 -
Is that what you've done then?Cassandra_W wrote: »If you invest your money wisely you could have had the return on it instead.0 -
The OP could have at least credited the original source the article was cut and paste from.0
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What a load of rubbish. I bought my house in 2003 for £150k it's now worth at least £200k so I've made £50k min. Now I can buy an even bigger one wait until I make money on it and then buy a bigger one still! In 15years time I'll have a 13 bed mansion with 22 acres and a full sized Olympic velodrome.
Its the pwopadee ladder innit!Debt Is Slavery.0 -
Great, another alter-ego.This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0
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undetterred wrote: »The OP could have at least credited the original source the article was cut and paste from.
Where was that?0 -
HPI is good for property investors, not so much for yer regular joe home owner.0
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Thrugelmir wrote: »Thats news to me. I've wondering for months what's been going on.
I was worried that we may be in a reccession , a global economic downturn. Though obviously not. Phew! That's one less thing to worry about.
It's good that the rest of the western world joined in lowering rates also, all just to make buying look cheaper than renting in the UK..
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