Cool graph from the BBC

RudeYute

My old man just mentioned how theres a plan to charge VAT on houses - Imagine that!

The objective is to get people spending less, hence decrease debt.

Tassotti

statistics, for and against, mean s...hit

are you making money from property...yes..carry on

...no.. sell and cut your losses

Reality hits

mr.broderick

lypsey wrote:

Is the shock you talk about meanmachine - 1 or 2% Interest rate rises (and believe me if it is as much as 2% then the market will be self correcting and crash big time) , or is it unemployment rising , or immigration having a negative effect on wages in the building sector etc , or the ten fold increase in BTL ditching their portfolios .
Remember a FTB will not come back into a falling market

Take your pick ... its happening

Lypsey do you spend all your days prophecising doom on here?
I guess you rent and are currently paying someone elses mortgage..or am i totally wrong?

Tassotti

RudeYute wrote:

My old man just mentioned how theres a plan to charge VAT on houses

My old man's a dustman......well..was many years ago..he got to know people who were struggling to pay their mortgage...I 'helped them out' by buying them out of their situation for a majorly reduced priced (aged 26)

Stopped a lot of people being repo'ed (yeah I'm a hero)

I think we should keep MSE as an advice site and not an extra outlet for HPC losers.

lypsey

Mr Broderick
I am not sure why you have doubts but most of what I stated was factual

1) Interest rates are rising ( incidently most economist predicted LOWER rates when they forecast this time last year)

When I state that the market is self correcting that is factual . Let me give you an example
Say for instance you have 10,000 quid a year for your mortgage. Now if IR's are 5% you can borrow 200,000.
200,000 x 5% = 10,000

What happens if we now go to 6% . You still only have 10,000 available for the mortgage
166,000 x 6% = 10,000

With only a small 1% rise you can now only purchase a house worth 34K less. It is very simple that small 1% rise is making a massive 17% difference in the market. People forget that for a decade we have had IR's that are way under the long term average ( I think it is 7% but could be wrong) what do YOU think is going to happen when IR's return to the average. Don't come back on this point and say "this times it is different"

Unemployment is rising - fact
Immigration is keeping wages lower - FACT

Ok , I threw the last point in , but joking apart no-one is going to keep a BTL property if it goes DOWN 5% every year for the next 5 years.. are they

lypsey

Mr Broderick
One last thing , I bought my first property because people said property always goes up , 1 day before double MIRAS finished . I was in NEGATIVE equity for 9 years . I know how difficult it is to move house with negative equity whilst your already mortgaged to the hilt

Do you have experience of house prices GOING down.

cwcw

lypsey wrote:

Mr Broderick
I am not sure why you have doubts but most of what I stated was factual

1) Interest rates are rising ( incidently most economist predicted LOWER rates when they forecast this time last year)

When I state that the market is self correcting that is factual . Let me give you an example
Say for instance you have 10,000 quid a year for your mortgage. Now if IR's are 5% you can borrow 200,000.
200,000 x 5% = 10,000

What happens if we now go to 6% . You still only have 10,000 available for the mortgage
166,000 x 6% = 10,000

With only a small 1% rise you can now only purchase a house worth 34K less. It is very simple that small 1% rise is making a massive 17% difference in the market. People forget that for a decade we have had IR's that are way under the long term average ( I think it is 7% but could be wrong) what do YOU think is going to happen when IR's return to the average. Don't come back on this point and say "this times it is different"

Unemployment is rising - fact
Immigration is keeping wages lower - FACT

Ok , I threw the last point in , but joking apart no-one is going to keep a BTL property if it goes DOWN 5% every year for the next 5 years.. are they

The banks offering fixed rates of around 5% for the next 10+ years obviously don't think there's much chance of interest rates rising significantly. Banks aren't in the business of losing money, and they're in a position to have as good an insight as possible towards future rates.

Unemployment is historically low - fact
Immigration is pushing up demand for housing - fact
Demand is greater than supply - fact
House prices are still rising, so nothing "is happening" - fact

House prices could carry on rising but at a slower rate - fact
House prices could crash within the next 5 years - fact
Terrorists could nuke us all into oblivion tomorrow - fact

lypsey

Unemployment
http://news.bbc.co.uk/1/hi/business/6149830.stm
It states "UK unemployment is continuing to rise - climbing by 27,000 to 1.71 million in the three months to September, the highest level in seven years. "

Immigration - do you REALLY think a cook , chef , roadsweeper , fruitpacker on £5.10 an hour is able to influence a market where the average house is 176K. Come on man you need a better arguement than that

Demand is greater than supply , Its has never been any different over the last 20 years . Look at the graph attached , you will see 3 peaks , two of which have troughs after them . Now look at the biggest peak , what will follow .... as I keep saying markets generally return to a norm/average

http://www.in2perspective.com/nr/stats/house-price-to-earnings-ratio.jsp

I accept that prices are rising but sentiment is changing . 6 months ago you never read in the paper of a crash , now it is weekly and daily , try reading the Telegraph on a Saturday. You have to remember that the Halifax , Nationwide , Countrywide , CML all have a massive vested interest in keeping the market buzzing . Don't believe everything you read

meanmachine_2

cwcw wrote:

The banks offering fixed rates of around 5% for the next 10+ years obviously don't think there's much chance of interest rates rising significantly. Banks aren't in the business of losing money, and they're in a position to have as good an insight as possible towards future rates.

I'm afraid you're showing your ignorance here.

Anything else you think you know about but don't know about?

You can get a 10 year fix at 5%, because the banks will sell the debt on to a pension fund.

Wonder why pensions are performing so badly? Now you know why.

It's like saying "why would a bank in 2003 sell you a 5 year fixed rate at 4% if they're now making a loss on that deal?"

They're not.

tomstickland

ManAtHome wrote:

Hey this one's 3-d and everything, kewli-wewli...

http://www.creditaction.org.uk/images/clip_image002_016.gif

Ingoring the unnecessary 3D effect, that's a great graph. So in ten years we've gone from £400bn to around £1,000bn of secured borrowing. Is this where the "growth" has come from then? Castles in the sand etc.