Today's Bear food

chucknorris

p1212 wrote: »

You sure about that? 300K saved interest per 7 years is 42K per year, 3500 per month. So you could pay monthly 3500 just for interest before 2008?

How much was the monthly instalment with capital repayments, monthly 7-8 grand or what?

What kind of job you have?

Back in early 2008 (when the base rate was 5.5%) our monthly mortgage payment was around £4,600 (interest only), it is currently only about £425.

Yes I am sure, it is over 8 (not 7) years since the base rate started to be reduced from Feb 2008 (Oct 2008 was the start of more significant cuts, but there also 2 x 0.25% smaller cuts prior to then Feb & April 08) and we still have £680k mortgage (but my wife also paid off another mortgage £170k mortgage back in 2012). My job isn't a factor, but for the record I work as a university lecturer and I am a chartered quantity surveyor by profession.

cells

p1212 wrote: »

Prices down 10% in 6-12 months will be good enough as a start, thank you.

I know some people like to forget, but someone actually needs to repay all that debt. When you take on debt you exchange someones future income for today's money. That money will be missing from tomorrows economy and that will result in a recession, unless you can devalue money and inflate away the debt.

Now this has worked for a while, but recently people took on so obscene amount of debt just to be able to live somewhere, that their repayments are now too big part of their income, there is nothing left, so they are not able to spend.

While there is an overflow of cheap money in housing market, there is a money shortage in real economy. People have to live somewhere, while iPhones are not important, so they HAVE TO spend their money on your high house prices in shadow economy rather than spending their money in real economy - consuming.

Also ironically your debt inflated house prices brought up a generation of extreme frugal people, who learned how to save every penny, and even if they will have their houses paid off later and they could spend, they actually WON'T spend. Their income will be missing from the economy.

No one cares about bank rates and QE anymore, people just cannot and DON'T WANT to spend. The more QE you making, the lower the bank rates are, the more BTL-ers you've, higher the house prices will be and more and more of the next generations income will be missing from economy.

That's why we have deflation today, a lot of income is already missing from real economy today, due to people buying on too high prices yesterday - especially the young ones - and now paying half of their salaries on mortgage and they are not able to spend. The money supply went into house prices, so real economy has a money shortage, you pay the high mortgage, not the new car...

You can even put bank rates down to -5% these people still won't be able to spend as they still have hundreds and thousands of mortgage on top of their head and they will repay that one first.

Everyone knows this won't go on forever and asset price/wage ratio will reset at some point, but central bankers and leaders want to extend this, until its clear the game is more or less over, so they can have their share from the wealth until that time. And all this will leave to us is a huge mess.

So much nonsense

House prices are not unaffordable in the UK in most of the UK they are cheap/affordable. The UK is a rich country with a GDP of some £1.85 trillion and a stock of wealth in the region of £8.8 trillion.

p1212

chucknorris wrote: »

Back in early 2008 (when the base rate was 5.5%) our monthly mortgage payment was around £4,600 (interest only), it is currently only about £425.

Yes I am sure, it is over 8 (not 7) years since the base rate started to be reduced from Feb 2008 (Oct 2008 was the start of more significant cuts, but there also 2 x 0.25% smaller cuts prior to then Feb & April 08) and we still have £680k mortgage (but my wife also paid off another mortgage £170k mortgage back in 2012). My job isn't a factor, but for the record I work as a university lecturer and I am a chartered quantity surveyor by profession.

Sorry, but this is exactly why property prices are this high, trying to keep up with the joneses from interest only debt...

... and when prices went free fall in 2008 due to this kind of irresponsible lending, government and central bank actually saved you together with the banking system. In a free market prices would've fallen much more then lender would've called in the missing equity rendering most of the interest only joneses + some banks bust, then we would have normal prices today.

Now, I don't know your situation and plans, but the funny thing is most people I know haven't used this low rate + "free money to everyone on debt" period to actually pay off their mortgages, no, ohh no...

They rather withdrawn equity, spent it on high lifestyle, bought another house etc... keeping themselves leveraged instead of paying off a more moderate house and get on with life without debt. Now if they don't ever repay their debt and keep themselves for example around 50% equity through all of their life, it is highly likely that they will lose everything at some point.

ukcarper

p1212 wrote: »

Sorry, but this is exactly why property prices are this high, trying to keep up with the joneses from interest only debt...

... and when prices went free fall in 2008 due to this kind of irresponsible lending, government and central bank actually saved you together with the banking system. In a free market prices would've fallen much more then lender would've called in the missing equity rendering most of the interest only joneses + some banks bust, then we would have normal prices today.

Now, I don't know your situation and plans, but the funny thing is most people I know haven't used this low rate + "free money to everyone on debt" period to actually pay off their mortgages, no, ohh no...

They rather withdrawn equity, spent it on high lifestyle, bought another house etc... keeping themselves leveraged instead of paying off a more moderate house and get on with life without debt. Now if they don't ever repay their debt and keep themselves for example around 50% equity through all of their life, it is highly likely that they will lose everything at some point.

You do realise that most mortgages are paid off in full either at the end of the term or when the property is sold.

p1212

ukcarper wrote: »

You do realise that most mortgages are paid off in full either at the end of the term or when the property is sold.

You understand the words "interest only debt"?

ukcarper

p1212 wrote: »

You understand the words "interest only debt"?

Yes but that doesn't alter the fact that most mortgages are paid off in full.

cells

p1212 wrote: »

Sorry, but this is exactly why property prices are this high, trying to keep up with the joneses from interest only debt...

... and when prices went free fall in 2008 due to this kind of irresponsible lending, government and central bank actually saved you together with the banking system. In a free market prices would've fallen much more then lender would've called in the missing equity rendering most of the interest only joneses + some banks bust, then we would have normal prices today.

Now, I don't know your situation and plans, but the funny thing is most people I know haven't used this low rate + "free money to everyone on debt" period to actually pay off their mortgages, no, ohh no...

They rather withdrawn equity, spent it on high lifestyle, bought another house etc... keeping themselves leveraged instead of paying off a more moderate house and get on with life without debt. Now if they don't ever repay their debt and keep themselves for example around 50% equity through all of their life, it is highly likely that they will lose everything at some point.

prices did not freefall during 2008 they just about went back to what they were at the start of 2007

prices are not expensive, in about 75% of the country they are cheap

and as usually most of your posts are full of self convincing fluff and nonsense that work on the converted. the uk is a rich country with affordable property with maybe one exception and that is london but 85% of the country is not london. And even with London there are good reasons why prices a high

AFF8879

cells wrote: »

So much nonsense

House prices are not unaffordable in the UK in most of the UK they are cheap/affordable. The UK is a rich country with a GDP of some £1.85 trillion and a stock of wealth in the region of £8.8 trillion.

I think this is a point that needs to be made a lot more, it's so frustrating reading all these tabloid headlines about "Britain's Housing Crisis" when in vast majority of the country home ownership is affordable and in many other areas downright cheap...

People are migrating to an urban lifestyle, and want to live in / near cities. Therefore prices rise in these areas. But go out to the sticks and they're practically giving houses away. Maybe a slight exaggeration but more people want to be in cities, myself included, and are prepared to pay a premium to get it.

chucknorris

AFF8879 wrote: »

I think this is a point that needs to be made a lot more, it's so frustrating reading all these tabloid headlines about "Britain's Housing Crisis" when in vast majority of the country home ownership is affordable and in many other areas downright cheap...

People are migrating to an urban lifestyle, and want to live in / near cities. Therefore prices rise in these areas. But go out to the sticks and they're practically giving houses away. Maybe a slight exaggeration but more people want to be in cities, myself included, and are prepared to pay a premium to get it.

Although it isn't 'in a city' yesterday we visited the street again that we soon want to live in, and we are now waiting for a suitable house in that street to come up for sale. We will be cash buyers (we are hoping to be the preferred buyer), we will have a house to sell, but we don't need to (and probably won't) sell our current home until after we have bought the new home, this will also help if some modernisation work is needed, as we don't want to live in a messy building site, even for a short while. It is a very nice street, so we aren't anticipating a house being put on the market straight away, we might have to wait a few years.

economic

I'm looking to buy another as well and keep my current two bed in Highgate to let out. The yield isn't great however what is the alternative? Yield is similar to stock dividend yields plus I get leverage. My aim is to move to a part time job. Currently I earn £100k and having to pay 40% of a lot of my income sucks big time. Since I don't particularly love my job and don't need the income, I am thinking of using the rental income and part time job income to support my lifestyle whilst keeping under 43k income so I only ever pay 20% tax.