Shock Interest Rate Announcement

Rich_by_Name_2

shortchanged wrote: »

This argument surely has to be about the greater good.

Whichever ever way it goes some people are going to lose out. With interests rates as they are now, borrowers are benefitting and savers are suffering.

I do honestly believe that the greater good for this country in the medium to longer term is a cheaper, well regulated housing market that is accessible to many. To acheive this and to help prevent further boom and bust cycles house prices need to drop and lending needs to be strictly maintained to keep a lid on things.

Yes I do feel sorry for people who bought during the peak, but I also feel sorry for FTB's who are expected to pay the stupid prices for houses to get on the ladder these days.

The bottom line is there will be some losers out of this and to be honest most of us who are to blame are current homeowners who bought pre boom because we are the greedy ones who are wanting something for nothing.

Basically the housing market over the past decade has been nothing more than one of those horrible pyramid schemes, where if you came in late you basically lost out and your money funded the peoples riches who got in earlier.

On the whole, aren't the 'sufferers' from the first group the same people that are 'blamed' in the second group?

So, in the name of benefitting the greater good, isn't there some justice there?

Rich_by_Name_2

shortchanged wrote: »

Rich_by_Name wrote: »

BUT, there are loads of posts on MSE about saving for a deposit. If there is to be a housing crash then it is to the detriment of those people that have worked hard to get themselves in the position of owning their own home.

Yes but don't you think during the boom years there were many FTB's who never actually saved for a deposit because the banks were handing out 100%+ mortgages back then.

I'm not sure what you're saying because there is no question as such (and there quite probably wasn't meant to be) but yes, there was plenty of FTBs that didn't have to save for a deposit.

A housing price crash would potentially plunge them into negative quity but wouldn't affect them quite so greatly, simply because they didn't put years of savings into the process first.

Are you suggesting that they are hung out to dry as well?

Pobby

Following this thread. Shortchanged talks a lot of sense. Sadly the damage has been done. Gordon Brown did let the housing market get out of control in a very serious way. I see little wage inflation if you are fortunate to hang on to your job. All my young friends, some with degrees have no chance of getting a place.

My girl takes home up to £1,700 a month but has no chance in buying even with her boyfriend who is earning.

0.5% interest rate is just a way to let the banks get their foolishly lent money back. Good to see some people benefit from fixed mortgages. Yet with the job market, as it stands, I would be fearful.

I mentioned earlier, my wonderful wife and I are just short of retirement. Poor annuities, decent savings, yet little return. Much of this, I believe has been brought about from the interest bailout due to mad lending.

DervProf

Rich_by_Name wrote: »

Not exactly. The mantra that "Negative equity is a terrible thing" does not mean that 'any fall in property prices is to be avoided'. Far from it. However, a SIGNIFICANT fall in property prices' would cause misery for last years FTBs, however insignificant in numbers those individuals, couples, and families are, and however insignificant their lives might appear to those that would be largely unaffected.

As long as last year's FTBs are concerned, negative equity will seem like a problem, but as long as they keep paying their mortgages and wait a while, they shouldn't "suffer" too much. And anyway, it may seem like it, but I am not aware of any guarantee that property will always go up in price. Although, the media might lead us to believe otherwise.

ILW

DervProf wrote: »

As long as last year's FTBs are concerned, negative equity will seem like a problem, but as long as they keep paying their mortgages and wait a while, they shouldn't "suffer" too much. And anyway, it may seem like it, but I am not aware of any guarantee that property will always go up in price. Although, the media might lead us to believe otherwise.

Bought my first place in 1990 and spent around 10 years in NE. Didn't bother me that much, just kept paying the mortgage (repayment) and stayed put. The fact that rates trebled to around 12% was the main worry. I do not see NE as the disaster that some seem to.

DervProf

ILW wrote: »

Bought my first place in 1990 and spent around 10 years in NE. Didn't bother me that much, just kept paying the mortgage (repayment) and stayed put. The fact that rates trebled to around 12% was the main worry. I do not see NE as the disaster that some seem to.

So you didn't really suffer ?

Incredible. NE is supposed to be a really bad thing.

I suppose if you had wanted to move within the first few years, there may have been an issue, but how many FTBs do actually move within 5 years of buying ?

ILW

DervProf wrote: »

So you didn't really suffer ?

Incredible. NE is supposed to be a really bad thing.

I suppose if you had wanted to move within the first few years, there may have been an issue, but how many FTBs do actually move within 5 years of buying ?

That was my point, I think part of the problem is that many have got used to the idea of remortgaging every two years (and having a bit left over for a holiday etc) and have got away from the idea of just using the mortgage to pay for a place to call home.

RenovationMan

Interesting article posted on another board in MSE:

http://www.moneysavingexpert.com/news/mortgages/2012/02/dear-chancellor-dont-cap-mortgage-lending

DervProf

RenovationMan wrote: »

Interesting article posted on another board in MSE:

http://www.moneysavingexpert.com/news/mortgages/2012/02/dear-chancellor-dont-cap-mortgage-lending

No suprise that most new rules or regulation is rejected by those in the property market. Brokers, EA's, lenders etc all generally want a "hands off" approach.

It may have escaped the notice of the likes of Ray Boulger that his industry came very close to a catastrophe, only intervention from the government/BoE saved them (and the whole country) from financial disaster. They don't mind financial props being introduced to support the property market, but object when (in my opinion) sensible rules are introduced.

I know I'll hear the argument that the financial crisis wasn't caused by the UK property market, or the UK banks (it was, after all, the Americans that were misbehaving). Let's for a moment imagine that the Americans hadn't hit the buffers. Our property market would have no doubt carried on booming. Would any rules or regulations have been introduced to bring things under control ? I doubt it, and it may not have been the Americans that caused/triggered the credit crunch.

If the likes of Ray Boulger want the mortgage market to be "left alone", then I, as a tax payer, don't want to have to bail out that market if and when it all goes wrong.

Thrugelmir

DervProf wrote: »

I know I'll hear the argument that the financial crisis wasn't caused by the UK property market, or the UK banks (it was, after all, the Americans that were misbehaving).

While the financial crisis wasn't created by the UK property market. The UK property market has some sizable hurdles to overcome before any degree of normality will finally return.

The UK property market would have hit the buffers at some point in time. As both the lending policy and business models of some lenders was fundamentally flawed.