The Fascinating HPC Debt Slave Conundrum

Koldweather1

I don't think many HPC are wanting to rent forever, rather they believe that renting is cheaper UNTIL there is a price crash and that the difference between buying at a higher price or renting for 5-10 years will be lower so they will save money on renting than buying at what they view is a 'high price'.

Using that 200k house example, they believe its better paying something close to 10,000 a year for 5 years as they believed prices would drop by 50% in theory making them 50k better off.

However every single year prices hold up the bigger the crash needs to be for them to be quids in, and the long term renters are probably now going to need a crash almost down to nominal 1990s level.

The other thing to remember is that if your renting, the odds that you are going to be able to retire will probably quite slim outside those that get lucky/have a good defined benefit scheme/those who have no live and save all money possible. I can't imagine there are a huge number of people who could pay that 1,000 a month (obviously without even considering bills, food, etc) without having a job. In theory a mortgage free person could retire somewhat early if they have tried to build up their pension pot to a decent level. Renters are going to have little chance of that happening.

Thrugelmir

ilovehouses wrote: »

You were probably saying that nearly a decade ago when my mortgage rate went under 3.5% and stayed there. I can get a 10 year fix today that's well under 3.5%.

So, if I wished, I could guarantee that nearly two decades of my mortgage was under 3.5%.

I don't know what the future holds but a couple more decades of low interest rates doesn't seem that fanciful a prediction.

Indeed 10 years have past. However I'm looking forward not backwards. Hindsight has no value when the future looks to be very different.

HPC_Ghuol_Hunter

Thrugelmir wrote: »

Indeed 10 years have past. However I'm looking forward not backwards. Hindsight has no value when the future looks to be very different.

Hindsight has as much value as your crystal bowels looking forwards. Over the next 10 years I actually see a harder case for increasing interest rates than keeping then low. 10 years ago keeping them low seemed imaginable.

Koldweather1

As has been said, we have been rather addicted to low interest levels, I think we must be fast approaching the point of saturation where there is probably a bigger case that the medicine will cause more damage to the economy than the disease it is meant to cure.

I also have to think that the powers that be will be putting huge pressure on policy makers to keep interest rates low, no government will want to be the cause of the crash, the 08 *crash* put labour into a position which it still seemingly hasn't totally recovered from yet despite a pretty unpalatable tory party. Eventually demographics will shift the governments interest towards stabalising prices to allow the young to have half a shot at getting onto the ladder and make life for long term renters far more stable, but we aren't there yet. Maybe another 5-10 years and that axe may swing.

westernpromise

caronoel wrote: »

In November 2008, suggesting base rates would remain at (or below) 0.5% for almost a decade would have been described as wishful thinking.

Indeed. For the last 8 years fixes at 1.x% have been available and you can now fix for another 10 years at 2.x%. This gives a total of 18 years at rates below 2%. 18 years = 3/4 of a mortgage term.

The question is what will send rates back up again. It isn't at all obvious what might do that.

Malthusian

Koldweather1 wrote: »

I also have to think that the powers that be will be putting huge pressure on policy makers to keep interest rates low, no government will want to be the cause of the crash, the 08 *crash* put labour into a position which it still seemingly hasn't totally recovered from yet despite a pretty unpalatable tory party.

Blair's psychotic determination to stick to the Granita Pact and allow Gordon Brown his turn yet delay that moment as long as possible put the Labour Party into this position. No credible successor could emerge when it had already been decided that Blair's successor would be completely useless. After Brown was defeated the Labour Party had been totally hollowed out of leadership material, with the best they could come up with being first Ed Milliband, and then a howling void into which the Trots swarmed.

No government wants to be the "cause" of a crash but crashes don't give politicians the choice of whose turn it is when they come around. Nevertheless, both the blue team and the red team have overseen their fair share of crashes and they are both still here.

When it's your turn the electorate overlooks how useless you were during your last crash and focuses on how useless the other lot were during their last crash.