Tumbling mortgage demand

shortchanged_2

FTBFun wrote: »

You keep referring to historical events as if the same pattern is going to be duplicated in the future. There's no guarantee that's the case.

Well look at where we are now with the housing market and that is mainly thanks to irresponsible, loose lending rocketing house prices.

Is that a good thing? I certainly don't think it is.

wotsthat

shortchanged wrote: »

For starters a mortgage of 4.5% would be historically very low and chances are rates are only going one way from here.

So get a fixed rate?

HAMISH_MCTAVISH

shortchanged wrote: »

For starters a mortgage of 4.5% would be historically very low and chances are rates are only going one way from here.

Really?

Perhaps you'd care to explain the economic mechanism through which you think long term mortgage rates from here will average above 4.5%.

Particularly when even the BOE admit the neutrality point for base rates moving through the next cycle will likely be 2.5% or so versus the 6% it was in the last cycle.

I'd be fascinated to see if you can spark two brain cells together and connect the dots.

shortchanged_2

HAMISH_MCTAVISH wrote: »

Hang on, just 5 minutes ago you tried to argue that FTB's should be buying the average house with no equity behind them.

Do make up your mind.

What are you talking about now Hamish?

RenovationMan

FTBFun wrote: »

You keep referring to historical events as if the same pattern is going to be duplicated in the future. There's no guarantee that's the case.

IIRC interest rates in Japan have never been above the 3% mark since 1995 because of their own property crash. Ours might take less time to unwind, though their economy is probably more robust than ours.

It's interesting how I'm often slated for taking advantage of low rates, but the same people slating me are the ones calling for a housing crash that will result in, wait for it, low rates.

FTBFun

shortchanged wrote: »

Well look at where we are now with the housing market and that is mainly thanks to irresponsible, loose lending rocketing house prices.

Is that a good thing? I certainly don't think it is.

Well that's all nice and that but you appear to be answering a different post.

Why do mortgage rates have to rise - because they were in double figures in the early 90s? Why do mortgages now have to be 3x income - because they apparently were (and I'm not convinced this is the case) previously?

HAMISH_MCTAVISH

shortchanged wrote: »

Well look at where we are now with the housing market

OK.... But I'd be prepared to bet you don't like what we see.

and that is mainly thanks to irresponsible, loose lending rocketing house prices.

Absolute nonsense.

I'll quote from a recent BBC article on the topic, based on a BOE research paper.

the median loan-to-value ratio on a new mortgage didn't go up during the "boom" years - in fact, for most of the 1990s and noughties it was falling.

That's consistent with the idea that rising house prices caused bigger mortgages - not the other way around.

Itismehonest

nearlynew wrote: »

How about saving or waiting for a wage increase?

At what point does that help?

I come from the era when houses were bought to be homes. The only form of investment we thought of property as was for our retirement & for the next generation to inherit.
One spent the first few years just paying off interest before one started to pay off the mortgage itself. Interest Only mortgages were unheard of. I seem to recall rates of 15% in the 70s.

Pensioners wanting to downsize are not in the position to influence what happens below them on the ladder. So, along with others who would move but can't, they sit in large houses that they neither need nor want. The money from their present property has to fund their next move but also, in many cases, has to fund their living during their final years.
One thing I can guarantee you is that what looks to be a good pension when you are 20, 30 or 40 tends to be a pittance when you actually get there.

shortchanged_2

HAMISH_MCTAVISH wrote: »

Really?

Perhaps you'd care to explain the economic mechanism through which you think long term mortgage rates from here will average above 4.5%.

Particularly when even the BOE admit the neutrality point for base rates moving through the next cycle will likely be 2.5% or so versus the 6% it was in the last cycle.

I'd be fascinated to see if you can spark two brain cells together and connect the dots.

Well what are most of the tracker deals at these days, around 3% plus base rate. I am ignoring these very low rates that some people are currently on because they will NEVER be that low again. Plus SVR's are slowing increasing.

So even on your example of the new norm you are looking at 5.5% rate mortgages.

HAMISH_MCTAVISH

shortchanged wrote: »

What are you talking about now Hamish?

You just gave an example where there was a shortfall in buying the average house, without including any equity from previous houses.

Sorry, you seem to be arguing for a ladder in one post, and against it in the next.

Which is it?