abbey ups mortgage limit by 5 times!

The_Tax_Mans_Cash_Machine

going2die_rich wrote:

Greater migration and the wealth of the nation so we have more money to spend.

A bust can only occour if their aren't any people left willing to pay the higher prices but with the UKs population increasing mostly due to migration, we are able to sustain the boom longer. Although migrants can't buy themselves mostly, they can rent, so BTLs are proviging the demand they'd have been generating had they been able to aquire mortgages to buy themselves.

Ironic that on the debt free board you're lauding "the wealth of the nation" - you mean debt then?

Greater migration does not help the economy, it depresses it when migration occurs during a boom. Higher commodities & energy prices = higher factory gate prices which = higher inflation.

Migrants = wage depreciation, so that the true effect of inflation is multiplied.

The answer to inflation is a) restrict the money supply & b) the (for some) dreaded interest rate rise.

As interest rates rise, companies make less profit, they lay people off, wage pressures depress wages further, & everything spirals down from there, with inflation continuing to rise, & interest rates rising to follow them & there being less money to stimulate the economy.

The outcome of throwing more money onto the already well over stoked debt fuelled economy with 5x mortgages & more loose lending, will be to push the boundaries of the debt bubble further, ensuring a much more catastrophic end when it all goes tits up.

At that point the migrants will probably pack their bags & go home, which is a shame, because you need cheap labour to stimulate the economy in a recession, not at the peak of a boom.

All Hail New Labour & their economic miracle.

Claire_DC

mystic_trev wrote:

I'm afraid it dosen't work like that! If (say) house prices fell by 20% your £75,000 home would be worth £60,000. You have a mortgage of £64,000 so therefore "negative equity" of £4,000 and you wouldn't be able to move until you'd paid that off to the lender. I remember the last crash all too well. Many people were left in this situation, and many others lost their homes.

See this is what i was unsure about, it did all seem a bit too simple which is why i didn't say it for certain. So if we had paid off more of the mortgage, that theory would be slightly more accurate?

Regardless of that anyway, we have a home which was the main reason for us buying this place.

Penelope_Penguin

Claire_DC wrote:

Besides, surely if there's a crash.. even though our house will be worth less, our mortgage will be enough for a better house at a lesser price (if what i have read on a forum is correct that is) and we're already used to paying for this mortgage amount.

Claire, you're right - trade up in a falling market. That's what we did - sold our first house in early 90s for less than we paid for it, but that didn't matter as we bought a 4 bed vicarage with 1/2 acre for a snip.

Penny. x

Claire_DC

Penelope_Penguin wrote:

Claire, you're right - trade up in a falling market. That's what we did - sold our first house in early 90s for less than we paid for it, but that didn't matter as we bought a 4 bed vicarage with 1/2 acre for a snip.

Penny. x

Blimey, you did well there then. It's comforting to know that it doesn't have to be doom and gloom if prices do crash.

I'm just glad that we're fairly level headed regarding the house purchase/prices as we haven't bought thinking that we're going to make a fortune on continual rising house prices.

I think it's mainly because first and foremost we wanted a decent home.. and this is only costing us an extra £46 a month compared to renting the council flat we had, with scummy neighbours and no room at all (excluding the extra fiver or so we pay for building insurance aswell as contents and a little extra for gas/electric of course).

xx