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Debate House Prices
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House price correction - Taking the hard route
Comments
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Do you mean the majority of the lenders, or the majority of the borrowers?
The 'gamble' so far has been on the rate at which property prices will increase. Everybody lost!
TruckerT
I was thinking more about the actual cost of mortgage, I doubt it would come cheap and adding in flexibility would become even more costly.
Something tells me the Banks wouldn't wish to lose."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Nonsense. House prices are driven by demand, supply and availability of mortgages. Also, it depends on the type of house - i.e. everyone wants to live in a 4 bedroom detached so prices of these properties tend to rise almost by the hour. Jobs are plentiful in the south-east and demand very intense, fuelled by constant immigration.
It's interesting that you speak of supply, demand and mortgage availability; mortgage availability is a factor of demand when it comes to the housing market. If you treat it separately then you should really separate out government policy, difficulty to develop etc and many other things that are factors of supply and demand.
The 4 bed detached example is actually quite inaccurate. Although everyone may 'want' to live in one (and drive a new bmw and take 2 foreign holidays a year) the proportion of the population who can afford it at the current prices is limited. Small properties are often the most expensive in terms of what you get for your money.Having a signature removed for mentioning the removal of a previous signature. Blackwhite bellyfeel double plus good...0 -
I'm not sure that recent events in Ireland and Spain allow us to use their property markets as typical examples.
Why are mortgages subject to a variable interest rate? Personal loans and HP agreements have a fixed repayment for the life of the loan. What is the difference between a new house and a new car?
TruckerT
Because a bank uses a product called an Interest Rate Swap as insurance when they lend at fixed rates. Those become very expensive over longer periods.
Google swap pricing if you want to know why.
Americans get long term fixes because the Government (in effect) subsidises them.0 -
When interest rates go up, house prices will start falling.
Well above 99% of owners sustain a mortgage no matter where rates go. Plenty of us managed rates of about 6/7% for long periods in the past.
Your logic minds me of that which asserted millions of sockpuppet landlords would bail out as values fell. As ever the doomsayers got it all ars%$e about face.0 -
Why are mortgages subject to a variable interest rate?
Gordon Brown and others tried very hard to get the public to fall in love with long term fixed rates but I can tell you it never works because people do not want a 15 year tie in in case they need to move home / get divorced etc where there is no guarantee on moving home they will still fit lenders criteria.
Long term fixes also represent a considerable compo target "we you sold a 15 year fixed rate and now find yourself having to pay thousands to exit - call compo-claims line now???:mad:
I often hear the following "I was stitched up with a 10 year 6% rate"0 -
when interest rates return to 5 or 10% (which has to happen at some point).
When interest rates go up, house prices will start falling. This will increase the number of would be borrowers who can afford to service the debt. Ironically, that will be exactly the point when people will lose the desire to buy (as has happened in Ireland and Spain).
Whilst I totally agree with you on what would happen when interest rates rise. But this is the question, they are saying that they will be low for a couple more years. there is no sign of them rising yet. and who is to say that they will not keep them low for 20 years...0 -
Well above 99% of owners sustain a mortgage no matter where rates go. Plenty of us managed rates of about 6/7% for long periods in the past.
I wonder how much more someone would have to pay on the average mortgage since say 2002 at 6 or 7% compared to someone with a mortgage pre boom? Seeing as house prices have doubled or more since then.0 -
It's interesting that you speak of supply, demand and mortgage availability; mortgage availability is a factor of demand when it comes to the housing market. If you treat it separately then you should really separate out government policy, difficulty to develop etc and many other things that are factors of supply and demand
The housing market appears to not actually exist - it is simply manipulated by governments and bankers in much the same way as a communist state might behave.Because a bank uses a product called an Interest Rate Swap as insurance when they lend at fixed rates. Those become very expensive over longer periods.
Google swap pricing if you want to know why.
Americans get long term fixes because the Government (in effect) subsidises them
The UK government's Help to Buy scheme is a government subsidy which offers no long term guarantees.
TruckerT...According to Clapton, I am a totally ignorant idiot.0 -
The UK government's Help to Buy scheme is a government subsidy which offers no long term guarantees.
TruckerT...
The Help to Buy scheme is a political ploy to get some traction, to get some money moving to pep the economy up and help keep developers solvent. WIll be a nice sweetnener just before the election too.
It has little to do with the long term housing situation."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Many of the antiquated procedures involved in 'property' transactions stem from medieval ideas about 'property' ownership which bear little relevance to modern ideas of house purchases and sales.
The idea that lenders should be able to vary their interest rates at will goes against modern ideas of consumer rights.
TruckerTAccording to Clapton, I am a totally ignorant idiot.0
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