Income vs Inheritance

getmore4less

Generali wrote: »

To work through the figure, apparently there are about 540,000 deaths a year. Of those, half leave less than £5,000 and half more. The half leaving more than £5,000 leave an average of £260,000 so total inheritance is probably about £72bn or roughly the OP's figure. Good guestimation cells!

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/450011/IHTNationalStatisticsCommentary.pdf

you can't assume 1/2 the death are under £5k.

All you can assume is about 1/2 go through an official administration(probate) and of those some get taxed

Many estates do not go through probate or have IHT charged that are well in excess of the nil rate band(£325k) due to exemptions.


Wealth statistics based on the current death data lags reality by a significant number of years.

mwpt

cells wrote: »

State regulation is causing applicants that would otherwise get mortgages based on internal credit risk to be turned down. That is rationing it only impacts maybe 10% of households but that's a swing of 3 million households to rental or ownership.

The over reaction made of v.hard for older borrowers to get mortgages. But since the old vote and perhaps some old politicians were turned down for mortgages that over reaction has been largely reversed with some banks lending to age 75 and even talk of some building societies looking into lending all the way to 85.

I'm sure a few years back you didn't even think of that group let alone the rationing they were facing. You would have stood up and cried that mortgage rates qee lower than they ever had been.


The age over reaction is going.

We now need the interest only over reaction, the self cert over reaction and the 100% over reaction to go too

You still haven't answered my question. You have typed out the same stuff you always do when you respond to it.

I'll ask again, why do you consider it mortgage rationing when we have easier and cheaper credit than most of history, except for 200x-2007?

cells

mwpt wrote: »

You still haven't answered my question. You have typed out the same stuff you always do when you respond to it.

I'll ask again, why do you consider it mortgage rationing when we have easier and cheaper credit than most of history, except for 200x-2007?

Most of history is irrelevant. You are making a call to confirm your bias. What does it matter if interest only mortgages were not available in the 1700s or if self cert was not available in the 1800s or 100% LTV was not available in the 1900s

The facts are simple. With 100% LTV mortgages more people become owners. With self cert more owners. With interest only more owners. That they were or were not available on period x y or z makes bondifference to the fact that if they were available ownership would be higher

mwpt

cells wrote: »

Most of history is irrelevant. You are making a call to confirm your bias. What does it matter if interest only mortgages were not available in the 1700s or if self cert was not available in the 1800s or 100% LTV was not available in the 1900s

The facts are simple. With 100% LTV mortgages more people become owners. With self cert more owners. With interest only more owners. That they were or were not available on period x y or z makes bondifference to the fact that if they were available ownership would be higher

I'm questioning your bias. You're still avoiding my question. Why are you calling it mortgage rationing when the only years ever where credit was easier to obtain than now were about 5 or 6 years in 200x-2007?

cells

mwpt wrote: »

I'm questioning your bias. You're still avoiding my question. Why are you calling it mortgage rationing when the only years ever where credit was easier to obtain than now were about 5 or 6 years in 200x-2007?

Don't you see your just playing on words?

Let pretend there is a financial product never been introduced before. It is introduced and the results are that homeownership increases and the risks are managed and priced.

For whatever reason the product is banned and homeownership falls.

I am saying look clearly with this product homeownership is higher and without it it's lower

You for some odd reason keep repeating that oh well it was only around for 5 year. What has that to do with anything? Is there a time before the introduction of this product you long for? If so why do you want ownership to be lower? Just to spite someone on an internet forum you don't know?


There is no doubt at all that with IO with self cert with 100% LTV ownership rates are higher than without. You can make a moral judgement all you like but your morals should in no way dictate to two parties who want to lend and borrow within their own internal risk model that they cannot do so.


As I said before the over reaction to the recession was clear. One was the drying up of mortgages for older borrowers. The banks regulator and government back tracked on that possibly because the older profession job men and women that make up the regulator the banks and the government had first hand experience of computer says regulations say no and they could see the stupidness for themselves. The rest will take a lot longer to reverse or they might not for decades bwcuase the people they impact are marginal poorer people and who gives a !!!! about them right?

MPD

We (society) tried easier credit, we had a crash, we regulated the easier credit away as many of us thought it contributed to the crash.

Time to move on to a new reality?

mwpt

MPD wrote: »

We (society) tried easier credit, we had a crash, we regulated the easier credit away as many of us thought it contributed to the crash.

Time to move on to a new reality?

cells believes that credit will solve everything. He doesn't answer what happens as we chase house prices higher and higher with easier and cheaper credit. What happens when ownership rates start to decline when 100% mortgages are not enough and lending multiples of 8 times income are not enough. He doesn't see any risk in chasing prices higher, and the reason is probably because he is the person on the other side of the coin. He is the net borrower in this system, the one who wins if asset prices rise higher. He isn't the future person who will be paying 8 times income and taking a mortgage than will take 40 years to pay back because we've chased rates to almost zero and extended terms out into retirement, but at least the monthly payments are affordable.

cells

mwpt wrote: »

cells believes that credit will solve everything. He doesn't answer what happens as we chase house prices higher and higher with easier and cheaper credit. What happens when ownership rates start to decline when 100% mortgages are not enough and lending multiples of 8 times income are not enough. He doesn't see any risk in chasing prices higher, and the reason is probably because he is the person on the other side of the coin. He is the net borrower in this system, the one who wins if asset prices rise higher. He isn't the future person who will be paying 8 times income and taking a mortgage than will take 40 years to pay back because we've chased rates to almost zero and extended terms out into retirement, but at least the monthly payments are affordable.

I think you are correct prices would go up modestly if more renters could bid.

But what is better for the renters. Renting a £200k house at 5.5% yield and paying £11k rent plus other rental costs or buying the same house for £220k on a 2.5% mortgage and paying £5.5k in interest?

Don't you think you are biting off your nose to spite your face by concentrating on the small one time increase in price rather than the massive 30-40-50 year annual lower cost for renter households to become owner households?

Also this is a case of if you've made a mistake its best to turn around now than later. For every day you hold out a thousand homes are added to the rental stock

MacMickster

Par of the problem with inheritance is that it leaves a lot of capital just sitting as savings.

With life expectancies now in the mid-80s and climbing, any sizeable inheritance left "to our children" is actually going to people approaching their own retirement. I suspect that much of it ends up sitting in savings accounts of those who inherit the money as a rainy day fund to see them through their own retirement, before then being passed on to their own children for the cycle to be repeated. It never becomes the circulating capital which helps to boost the economy.

Although grandchildren do often receive some of the overall inheritance, perhaps we now need a shift in the way that we view the idea of inheritance, so that grandchildren receive the bulk of most estates rather than the children.

mwpt

cells wrote: »

I think you are correct prices would go up modestly if more renters could bid.

But what is better for the renters. Renting a £200k house at 5.5% yield and paying £11k rent plus other rental costs or buying the same house for £220k on a 2.5% mortgage and paying £5.5k in interest?

Don't you think you are biting off your nose to spite your face by concentrating on the small one time increase in price rather than the massive 30-40-50 year annual lower cost for renter households to become owner households?

It wouldn't be a small one time increase. There is no fundamental "right" price for property that we will magically reach if we give everyone 100% mortgages on IO mortgages at 0% rates. The price of the asset is infinite in that case and your solution will result in us chasing this infinite price.