"Experts" warn of 'buy-to-let-bubble'

michaels

Wow - so what we seem to be saying is that higher interest rates are the only thing that might help potential first time buyers...funny old world

macaque_2

michaels wrote: »

Wow - so what we seem to be saying is that higher interest rates are the only thing that might help potential first time buyers...funny old world

I agree, its very odd but here's how it works:

Base rate 0.5%
Interest rate 3.99%
House price £450,000
Annual interest payments £17995

Base rate 5.5%
Interest rate 8.99%
Annual interest payments £17995
New adjusted house price £200,167 (plus curtains)

macaque_2

nollag2006 wrote: »

Certainly been my view on why I piled back into BTL in 2009.

Its swings and roundabouts - house prices rise, rent yield falls and vice versa.

That's the theory. Although, from personal experience, my own portfolio has risen by 15% in that time, and I've managed to jack the rents up by over 10% too!!

One of my tenants STR'd in early 2009, which makes it all the sweeter

Tom_Pickering

macaque wrote: »

I agree, its very odd but here's how it works:

Base rate 0.5%
Interest rate 3.99%
House price £450,000
Annual interest payments £17995

Base rate 5.5%
Interest rate 8.99%
Annual interest payments £17995
New adjusted house price £200,167 (plus curtains)

Care to explain this weird calculation?

macaque_2

Tom_Pickering wrote: »

Care to explain this weird calculation?

Base rate 5.5%
Interest rate 8.99%
House price £450,000 (minus curtains)
Annual interest payments £40455

Jeanetteathome

MrRee wrote: »

I've never seen so much jealousy of those who have actually got off their backsides and done something with their lives ... and, yes, sometimes made quite a lot of money from it too.

I applaud everyone who has made a success of themselves.

I applaud those who do something with their lives but I certainly don't applaud these snake oil merchants who after making all their money then go on to create this whole *wealth creation guru* thing , produce books DVD's and seminars costing hundred if not thousands for gullible people to attend. As this programme showed they are just taking people to the cleaners for their money.

Nothing to be admired there - a property developer who is successful yes, but a charlatan who preys off the vulnerable , no way.

IveSeenTheLight

macaque wrote: »

I agree, its very odd but here's how it works:

Base rate 0.5%
Interest rate 3.99%
House price £450,000
Annual interest payments £17995

Base rate 5.5%
Interest rate 8.99%
Annual interest payments £17995
New adjusted house price £200,167 (plus curtains)

Surely this is showing partially whhy a quick return to higher rates is not forecasted for some time.

abaxas

IveSeenTheLight wrote: »

Surely this is showing partially whhy a quick return to higher rates is not forecasted for some time.

That is a problem not a solution.

Our IRs are not just controlled by ourselves but also via the market. Since financial forcasting has about as much accuracy as Heat magazine's horoscopes, I would not put too much faith in it.

IRs will be 0.5% for the foreseeable future, but that doesn't mean we cant have an event that forces them to 5-8%.

Ie it's a punt, not a reality. People used to think the earth was flat and that lending lots of money to people who dont pay it back, was a good idea.

IveSeenTheLight

abaxas wrote: »

That is a problem not a solution.

Because of the economy, it's providing a temporary solution for many.

certainly the longer it's there, the better chance people have to pay down debts associated.

abaxas wrote: »

IRs will be 0.5% for the foreseeable future, but that doesn't mean we cant have an event that forces them to 5-8%.

IR's are 0.5% despite RPI being over 10 times the base rate.

What event do you predict could force base rates to 5-8%?