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Recession?
Comments
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Inflation has slowed to 1.9% thats despite 5 interest rate rises yet to feed their way into the system. A slowdown is definitely on the way !!No Links in Signatures by Site Rules - MSE Forum Team 20
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Sorry wrong place for my post!0
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Option 1:
You sell, you rent for a year, prices drop and you buy back. You win!
Option 2:
You sell, you rent, prices stay the same as interest rates rise. You lose!
Option 3:
You sell, you rent, prices rise. You can't buy. You lose!
Option 4:
You don't sell, you pay mortage. An honourable draw!
Given that the chances appear 2:1 against you making money, I'd keep the house. If you can afford the mortgage OK, then you will still have a house even if prices drop, rise or fall through the floor.
How is option 2 lose?? they have 50k or so in the bank i reckon thats more than they had before and theyd pay off all there debts. Thats win for me so thats 2:1 in favour0 -
Sorry, this is a bit vague! my oh has got it into his head that we should sell our house now as there is going to be a huge recession and house prices are going to drop dramatically he thinks we should clear our debts with our equity and then buy a house when the prices have dropped. Im really not sure this is going to happen, since we got on the property ladder 2 years ago we have made a lot of equity and knowing our luck house prices will continue to rise if we sell our house! does anyone have any information regarding this apparently expected recession, and any advice?
Thank you!
xx
There's no sign of a recession just yet but house prices do look set to take a tumble so this could be a good time to cash in your equity.
Selling at this moment in time and clearing debts whilst waiting for prices to fall is a solid strategy but beware that it's a gamble. Then again, so is buying a house with a huge mortgage and hoping that house price inflation makes a more affordable remortgage viable in a couple of years - something that a lot of people have done or are doing.
Note that if you were depending on the equity in your house to meet debts you really need to take a look at what you are spending your money on. Funding a lifestyle with debt and hoping that increased house prices bail you out is not a good idea.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
Inflation has slowed to 1.9% thats despite 5 interest rate rises yet to feed their way into the system. A slowdown is definitely on the way !!
No, CPI has slowed to 1.9%.
CPI is a heavily massaged version of inflation and like a lot of people I have little faith in it to accurately reflect a real reflection of increases in the cost of living. For most, the cost of living has been rocketing. More expensive food, utilities, fuel, higher taxes. Wages however have not been rising much.
Anyway, I agree a slowdown will happen but probably not until house prices start to stagnate and fall. The retail sector and a lot of service industries are dependent on people having lots of disposable income to spend. Up until now a lot of people have been borrowing on the back of the increased equity in their property. The end of the housing boom will stop that.
Also, there's been a lot of cheap and easy credit - also about to come to an end as a result of credit tightening by financial institutions in the wake of the ongoing US 'sub-prime' mortgage crisis.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
Guy_Montag wrote: »As a regular poster on GHPC & a thorough housing bear, I don't think I would ever STR, it's too damn risky for me, especially if I had a family.
I think it would depend on the circumstances (family with kids - forget it) and the size of the HPI bubble since you bought.
I know a couple of people, single, who have >100k equity in their houses right now (achieved in 6-7 years, based on EA valuation). There's no way they'll see a tax free windfall like that again. In their situation, I'd STR without taking a second breath.
Unfortunately, it may be too late for them as the local market is as calm as the Sargasso sea right now.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
FWIW, I can't see any way out of the current mess other than a good old fashioned recession to shake the rot out of the markets and to bankrupt the weak.
That's not to say that it's going to happen of course.
If it were me, if the house is suitable for my family I'd stay put. If I thought that I'd need to move at some point in the future I'd sell and rent for a bit to see what happens and get myself in a better financial position.0 -
FWIW, I can't see any way out of the current mess other than a good old fashioned recession to shake the rot out of the markets and to bankrupt the weak.
That's not to say that it's going to happen of course.
If it were me, if the house is suitable for my family I'd stay put. If I thought that I'd need to move at some point in the future I'd sell and rent for a bit to see what happens and get myself in a better financial position.
C'mon G, what do you think is going to happen? I agree we need a bit of a recession to shake things up a bit, focus minds & all that. There's too many estate agents & mobile phone shops & not enough productive work going on (IMO)"Mrs. Pench, you've won the car contest, would you like a triumph spitfire or 3000 in cash?" He smiled.
Mrs. Pench took the money. "What will you do with it all? Not that it's any of my business," he giggled.
"I think I'll become an alcoholic," said Betty.0 -
Guy_Montag wrote: »C'mon G, what do you think is going to happen? I agree we need a bit of a recession to shake things up a bit, focus minds & all that. There's too many estate agents & mobile phone shops & not enough productive work going on (IMO)
It's a tough call right now. There are a lot of unknowns with exactly who owes what to whom. That's been at the heart of the credit crunch and it's side effects (such as the unwinding of the carry trade). There are some financial institutions that must be looking at their books pretty nervously right now. JP Morgan, for example, has $4,500,000,000,000 of credit default swaps on their books (a type of credit default insurance policy). Now it depends exactly how that's been laid off and the quality of the book what future effect that could have on JPM. They've got extremely deep pockets and some very bright people working there and I'm sure they've done the sums but markets are very twitchy right now.
It's not just JP Morgan, there are rumours going around about all the very biggest banks in the world. The worst case scenario is what happens if JP Morgan or Deutsche or HSBC or Citibank go bust? It's a very scary prospect. If that happens then we're probably looking at a Japanese-style lost decade as a pretty rosy outcome.
The chances are something like that won't happen (it's a very rare occurence) but you never know. It may be that the banks report much reduced profits, they cut back on lending a bit, a few BTL people go to the wall along with the Property !!!!!! addicted 'property developers', people that are MEWing to pay the grocery bill, a bunch of private equity firms and overstretched City workers.
My feeling is that all this could get very nasty as it unwinds. We'll see though.0 -
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