Is there an exit strategy?

grizzly1911

OffGridLiving wrote: »

I'm not sure what savings would have to do with mortgage affordability during interest rate rises, unless the person lost their jobs and had to rely on savings until they gained new employment?

There are always a number of people who struggle financially and end up being repossessed, even during boom times. It's a very small minority of people compared with those who go through their entire mortgage term without difficulties.

The only reason for bringing lack of savings into the quation was to hilight that few peopel have much in the way of financial surplus. Perhaps some of the more careful people will have paid down the credit cards and consumer debt.

It is likely that their disposable income has being eroded further since 2007/2008 and this trend isn't likely to change in the short term. whilst interest rates have been low.

When interest rates increase there there will be even less disposable income to absorb it.

You are right that there are always some that run in perpetual financial crisis whatever. No doubt they will just start financing their lives on credit cards and consumer debt again.

Back to normal in the eyes of some.

The only people that will have been disadvantaged by the whole exercise will be those prudent savers.

grizzly1911

OffGridLiving wrote: »

I guess it depends on what you are classing as affordable. For the purposes of this discuss about interest rate rises, the fact that they are IO is not really relevant. It's whether the rate rises would prevent a significant number of people from meeting their monthly repayments.

Given the reasons I've mentioned, I just don't see an avalanche of repossessions when rates rise, other than that proportion of people who are always in financial difficulties, no matter what the underlying economy is like. Certainly I don't see it being a significant enough number of people to impact the wider housing market.

When rates rise, most people will be disappointed but will shrug and say "it was good while it lasted, but we all knew such low rates couldn't go on forever. Still, we made the most of it".

Why are they being held down for so long if there won't be a problem?

grizzly1911

wotsthat wrote: »

The exit strategy is simple - come 2017 the scheme stops.

Will it?:think:

wotsthat

grizzly1911 wrote: »

Will it?:think:

If it doesn't lead to increased supply it'll stop sooner.

JencParker

GhIFA wrote: »

But that is no different to how it has always been. You have to make sacrifices to save in the first place, and then make sacrifices when you first move in, it gets easier over time as your earning potential increases.



And again, I haven't said you shouldn't.

Mostly true, but with one big difference. In the past it was done on only one salary. Now two salaries are required. So single people and those with children, whose second salary is taken up with childcare costs don't have a chance unless high or higher earners.

John_Pierpoint

Generali wrote: »

I think you misunderestimate the problem.

Too few houses have been built in the UK since the 60s and since the disastrous failure that is the Green Belt in and around London.

It was the post war Labour government that introduced the town and country planning act and the green belt.

There are some good economic arguments against building an ever expanding dystopia of Los Angeles suburban bungalows from Charring Cross to Brighton; the costs of travel and the costs of infra structure for a start.

Any way the Condem government has changed the UK planning system since you migrated. Uhere is an interesting speculative bubble in "leisure" green belt land as the local authorities have been railroaded into finding more building land against a deadline of this summer. The "simple" criteria is now "sustainability". A significant number of local authorities will miss the deadline.
In these areas there will be "Planning by appeal".

In other areas, like mine, the staff cutting local authorities have simply panicked to meet the deadline. Near me there is a less than one acre "green belt" field that has recently been bought by a retired surveyor for the eye watering price of £65,000. Now this might be Hamish in disguise, but now that I understand what is happening, and the "strategy" plan has been published, I think his "punt" in not irrational. Lots of local "trouble makers", some of whom have been trying to wangle planning permission since 1947, are suddenly getting it.
"Sustainability" is a simple points and traffic light system. A long list of questions weighted and rated by points on a huge list of criteria each set of points gets a green amber of red and then gets carried forward to the grand total.
The questions are such as:
Distance from rail station ?
Distance from Doctor ?
Availability of local shop ?
etc.
etc.

Of course against such a rational system Hampstead Heath and Epping Forest pull in a high score.

There is also an increase in direct action as the atmosphere of free for all encourages more of this sort of approach.
[Even I was amazed by the intensity and geographical coverage revealed by this Google result.
Hamish beware of what you wish for, this is the product of a politically inspired "bring me your huddled masses....." multi million immigration policy].

All results for "Travellers" »

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OffGridLiving

grizzly1911 wrote: »

Why are they being held down for so long if there won't be a problem?

I guess it depends on whether you believe that rates were reduced to 0.5% in order to prop up the housing market and are being held there until it recovers, or you believe that rates fell for other reasons and will remain low until those other reasons are resolved?

I'm a believer of the latter, but if you are a believer of the former, then you have to ask yourself why Europe, the US and most developed countries also have such low rates. Are they really all conspiring to prop up the UK housing market, or did something else happen to have a major impact on the world financial markets that still hasn't been fixed?

grizzly1911

OffGridLiving wrote: »

I guess it depends on whether you believe that rates were reduced to 0.5% in order to prop up the housing market and are being held there until it recovers, or you believe that rates fell for other reasons and will remain low until those other reasons are resolved?

I'm a believer of the latter, but if you are a believer of the former, then you have to ask yourself why Europe, the US and most developed countries also have such low rates. Are they really all conspiring to prop up the UK housing market, or did something else happen to have a major impact on the world financial markets that still hasn't been fixed?

I appreciate that there has been a wider global screw up.

It was all the fault of that Clown apparently.

I did not suggest that they were being held low across the world to help our housing market. If there not a problem with affordability, as you suggest, there is no need for residential mortgage rates to stay so low.

OffGridLiving

grizzly1911 wrote: »

If there not a problem with affordability, as you suggest, there is no need for residential mortgage rates to stay so low.

Unfortunately we don't have a separate BoE rate for mortgage loans, so BoE rates can't rise for mortgages and stay low for the economy.

grizzly1911

OffGridLiving wrote: »

Unfortunately we don't have a separate BoE rate for mortgage loans, so BoE rates can't rise for mortgages and stay low for the economy.

Is there a reason there can't be one if affordability isn't an issue?