Shock Interest Rate Announcement

HARSA

RenovationMan wrote: »

Nah, I've paid £50k off my mortgage in 2 years and rates are going to be low for years and years. We live in a 5 bed farm house and I'm sat typing this while sat in front of a crackling wood fire.

What on earth can these people wind me up about? Honestly? :cool:

Wishful thinking methinks.

I am a RM groupie:money:

Well done mate and very happy things are working out for you. Long live low IR:beer:

shortchanged_2

RenovationMan wrote: »

This has always been my point about the 'Householder Bears' on here. They all bought before the boom and so are quite happy to be generous with some of that not-earned HPI money.

What about people who came after you guys? The FTBers from, say, 2002 onwards? Don't you care about them? What do they deserve?

The problem is RenoMan, there is now no easy solution to this and it is unfortuately the result of the rampant HPI that we had over the previous decade.

Yes there are many people like myself and yourself sitting pretty but there is also now a problem for people who cannot get on the market because house prices are so high, or if you want to put it your way or the Hamish way, banks are now being stingy and are not lending 6+ times income mortgages etc to help fund our massive equity.

As I said someone loses out in this, whether it is people who overpayed for property during the boom if prices drop or FTB's who cannot now raise the funds to pay the current high house prices.

My opinion is that a slow gradual drop (although I think it does need quite a considerable drop) is needed as to reduce the pain on those that overpayed for property and to also help people come into the market without overpaying for property in the first place.

To me it just feels like we're a generation who are robbing the current FTB's blind because they now have to start off with such a big debt from the off while we just cream off the equity from our properties.

RenovationMan

DervProf wrote: »

For those of us who bought before the boom to not encourage the banks to lend ever larger amounts, so that our "not-earned HPI money" be maintained (see Hamish, Sibley & Co.).

Meaningless rhetoric. You dodged my question by the way. What about the FTBers who bought after you, what happens to them in your HPC utopia?

RenovationMan

shortchanged wrote: »

The problem is RenoMan, there is now no easy solution to this and it is unfortuately the result of the rampant HPI that we had over the previous decade.

Yes there are many people like myself and yourself sitting pretty but there is also now a problem for people who cannot get on the market because house prices are so high, or if you want to put it your way or the Hamish way, banks are now being stingy and are not lending 6+ times income mortgages etc to help fund our massive equity.

As I said someone loses out in this, whether it is people who overpayed for property during the boom if prices drop or FTB's who cannot now raise the funds to pay the current high house prices.

My opinion is that a slow gradual drop (although I think it does need quite a considerable drop) is needed as to reduce the pain on those that overpayed for property and to also help people come into the market without overpaying for property in the first place.

To me it just feels like we're a generation who are robbing the current FTB's blind because they now have to start off with such a big debt from the off while we just cream off the equity from our properties.

Yes, it looks like everyone loses out, but yourself. I seriously doubt you would be so enthusiastic about reduced house prices if you were impacted to the point that you were tens of thousands of pounds in negative equity, at the mercy of your mortgage providers SVR and stuck in a house that may now be inadequate for your needs.

I'm also in favour of a slow gradual drop/static prices and things are working out well. However, for the levels you need houses to be to meet your x3.5 salary multiple (and remember that's for people with super clean credit records) we would have to see decades of gradual falls. In order to see decades of gradual falls we would therefore have to see decades of recession and austerity in the economy. Is that what you really want?

As an aside, I'm glad that you have returned to proper debating and not the trolling that really was quite unexpected and completely beneath you.

Mr._Pricklepants

DervProf wrote: »

As I`ve said before, I know and work for people who are far more wealthy than you are. None of them seem to need to tell me, and others about their success.

Everybody is different. Some do, some don't.
RenovationMan does and I'm not sure why it grates you that much. You may call it boasting or rubbing it in, for me it's inspiring to read about his success. It's MSE after all and his equity challenge thus regular over payments surely are a way of saving serious cash.

DervProf

RenovationMan wrote: »

Meaningless rhetoric. You dodged my question by the way. What about the FTBers who bought after you, what happens to them in your HPC utopia?

The value of their property doesn't increase as much as they thought it would. For some more recent FTBers, they may end up in negative equity for a while.

DervProf

Mr._Pricklepants wrote: »

Everybody is different. Some do, some don't.
RenovationMan does and I'm not sure why it grates you that much. You may call it boasting or rubbing it in, for me it's inspiring to read about his success. It's MSE after all and his equity challenge thus regular over payments surely are a way of saving serious cash.

I just dislike show offs.

I certainly don't mind reading or hearing about other's success, but when they keep repeating their "success story", it looks like they are showing off.

I`ve said several times that I think RM's overpayment plan is a good one, and it's certainly similar to how I have been paying off my mortgage. I just don't think we need chapter and verse every few days. No other forum member repeatedly reminds us of their financial details. I dare say that if there were to be a sudden negative change in RM's fortunes we wouldn't hear a peep.

Rich_by_Name_2

DervProf wrote: »

The value of their property doesn't increase as much as they thought it would. For some more recent FTBers, they may end up in negative equity for a while.

I don't see your logic. Why should people who made the commitment to save hard for years in order that they may have themselves a deposit for a property in, say, 2009 be expected to go into negative equity so that other first time buyers can come in, and be able to afford something of greater worth for putting in significantly less effort?

The line in bold doesn't bode well for a lot of people. Say prices went down by 30%. Someone who spent £150,000 with a ten percent deposit would not find themselves in negative equity for 'a while' as you so flippantly put it. Based on making the standard repayment at an annual interest of 4%, after three years (bringing us to today) they would still have £125,000 outstanding on a property now worth about £105,000.

And it would take a further five years to get the debt down to £105,000. And then they just break even.

Add that to the fact that they may be stuck for years in a property that may no longer suit their needs.

That is what you are proposing as a 'solution' isn't it! All you are proposing is shifting the onus of the overspend committed by the "have it now" culture of the previous generation from this generation's people that currently can't afford their own home to those that have worked hard in order that they can.

mcc100

RenovationMan wrote: »

This satisfied everyone but mcc100 who is actually just annoyed that I had such a large amount of savings and he does not. It's not fair.

What a foolish comment. You have no idea as to what savings I have as I have never felt the need to provide details of my finances on an anonymous forum.

I certainly have more savings than you, and if I had a mortgage with an interest rate fixed at 3% I would not be using them to pay off large chunks of it.

DervProf

Rich_by_Name wrote: »

I don't see your logic. Why should people who made the commitment to save hard for years in order that they may have themselves a deposit for a property in, say, 2009 be expected to go into negative equity so that other first time buyers can come in, and be able to afford something of greater worth for putting in significantly less effort?

The line in bold doesn't bode well for a lot of people. Say prices went down by 30%. Someone who spent £150,000 with a ten percent deposit would not find themselves in negative equity for 'a while' as you so flippantly put it. Based on making the standard repayment at an annual interest of 4%, after three years (bringing us to today) they would still have £125,000 outstanding on a property now worth about £105,000.

And it would take a further five years to get the debt down to £105,000. And then they just break even.

So, if prices fall 30% over the next few years, that's bad.

If prices rise 30%, that's OK.

Mmmm. Some people have short memories. Ask those in the US if they think "ever rising" property prices are a good idea. It's amazing how so many people in the UK have been "brainwashed" into thinking that a reduction in property prices is bad news, and that negative equity if the curse of the devil.

If a reasonably small proportion of mortgage payers have to "suffer" negative equity for a few years, in return for lower borrowing requirements and a shift from speculative investment in property, then so be it. Given the choice between being "priced out" or having negative equity for a few years, I wonder what a potential FTBer would choose ?