House buying risks

Crashy_Time

annabanana82 said:

My Brother is a ham fisted baboon when it comes to anything financial or administrative. If he's managed to keep his mortgaged home for 17 years then I'm not sure repossession really needs to register as a risk for the vast majority of the population.

That doesn`t help if you have bought recently and mortgage rates start going up again though? One of the side effects of the CB`s bailing out their debt system was that people who were clueless and over-borrowed got bailed out. The difference this time is that the "stimulus" is pushing up borrowing costs not lowering them?

Getting_greyer

Crashy_Time said:

Getting_greyer said:

Crashy_Time said:

Getting_greyer said:

Crashy_Time said:

Salemicus said:

> The Black Swan that bursts the bubble will be a stock market/credit market event IMO

Yes, something sort of financial crisis would probably hurt house prices.

Of course, we already had one of those. Tell me, if you'd bought at the peak, just prior to the 2007-8 financial crisis, and held until now, would you have made money, or lost money?

Time in the market >> timing the market.

You shouldn`t try to "make money" from a highly illiquid asset IMO, especially one that is designed for living in and not as an investment vehicle because you would have to downsize AND time the market to actually make any money. Most recent buyers are hoping to UPSIZE not downsize. The 2007 bubble was pumped back up with zero interest rates and massive money printing, but they can`t drop interest rates again and the amount of money printing required now, after a never in living memory deflationary event, is actually threatening to RAISE mortgage rates. The mistake you are making is in thinking that the next "Black Swan" will be the same as the last one.

Are you mixing up deflation and decreasing inflation again?

Are you mixing up stimulus and actual demand again?

No I am not and never have....? 

You can consider the CB`s and their stimulus packages as "part of the economy" or even as "the economy" if you want, that is a sensible investing approach, but they don`t do the level of stimulus we have seen over the past few years in reaction to "inflation" or even "declining inflation", their main enemy is deflation and that is the enemy they are fighting.

OK, how does this equate to me mixing up fiscal or monetary stimulus packages with demand for goods at certain prices? The answer is it doesn't.  
Yes spiralling deflation is a danger to an economy, arguably much worse than spiralling inflation and as we have low positive inflation that is only a short stride to deflation. Again this suggests an economy is not operating at output equilibrium....unemployment etc. Clasical theory suggests the answer is monetary levers such as to drop interest rates to stimulate demand.  However we are at near enough zero bound.  The BoE is clearly sceptical of nominal negative rates, so the answer is to buy lots of gilts to bring the real interest rate down to increase output. But if we have full employment the theory suggest that inflation can occur......this is an incredibly simplified piece on the dilemma CB's face.  I'll not go on further.  But the fact remains you told people we have been in deflation for years which is simply not true. And the BoE operates to the mandate it is given by the Chancellor.  Eg target inflation at X, it's not a devious plan you seem to think it is, there are just effects that occur as byproducts.

getmore4less

Crashy_Time said:

Keswick1uk said:

Crashy_Time said:

How are things progressing OP, what has your son decided to do?

He's looking at the market and the villages close by to work out his next step. Deciding areas he'd like to live and those with kerb appeal for resale. Plus areas where you can navigate without it being like a dodgems at the weekends. And where the buses run close ish too.

Apparantly, many more instructions are appearing daily on his rightmove searches - were 2 or 3 a day and now up to 10, so he's watching what is happening generally too. He's started to look at sold prices as well, as they get released on net prices (something like that). 

He's secured another years rent with no increase, so that's a temporary win too. He's found out he's likely to be able to borrow circa 162k.

So not much further on but he's content doing his thing.

Is he using PropertyLog to keep an eye on seller psychology?

Propertylog is broken costs £1.99pm to fix it.

Getting_greyer

I'm out anyway.  Every convo with Crashy seems to be me seeing something that's look like him saying "chalk is the same as cheese".  I'll then say "chalk and cheese are separate things"  he replies "so you don't think chalk is the same as milk, lol. Keep on believing that diary farms exist to make money from milk if it helps you sleep at night, sheeple." 

strawb_shortcake

Crashy_Time said:

annabanana82 said:

My Brother is a ham fisted baboon when it comes to anything financial or administrative. If he's managed to keep his mortgaged home for 17 years then I'm not sure repossession really needs to register as a risk for the vast majority of the population.

That doesn`t help if you have bought recently and mortgage rates start going up again though? One of the side effects of the CB`s bailing out their debt system was that people who were clueless and over-borrowed got bailed out. The difference this time is that the "stimulus" is pushing up borrowing costs not lowering them?

My brother is a so called mortgage prisoner anyway and already dealing in pretty high interest rates. 
But considering mortgage applications are stress tested it's still of little concern to the majority. 

BikingBud

Mickey666 said:

I'd far rather risk being a 'mortgage prisoner' for 25 years than being a 'rent prisoner' for my entire life and have nothing to show for it.

But it's not only 25 years now, it's 30/35 years and with massive deposits now required many can't meet these rates. 

strawb_shortcake

The longer mortgage terms can be a red herring though, I took my mortgage out 5 years ago on a 32 yr term, I'm now just under 15 years remaining, partly through remortgaging and partly making over payments. 
Peoples circumstances change, usually for the better so they can adjust and reduce as necessary. 

Equally I know someone that's kept a mortgage going for 40 years as the kept remortgaging to pay off other debts.

SpiderLegs

BikingBud said:

Mickey666 said:

I'd far rather risk being a 'mortgage prisoner' for 25 years than being a 'rent prisoner' for my entire life and have nothing to show for it.

But it's not only 25 years now, it's 30/35 years and with massive deposits now required many can't meet these rates. 

Well they can can’t they, or else they wouldn’t be buying houses. 🤦‍♀️

Mickey666

BikingBud said:

Mickey666 said:

I'd far rather risk being a 'mortgage prisoner' for 25 years than being a 'rent prisoner' for my entire life and have nothing to show for it.

But it's not only 25 years now, it's 30/35 years and with massive deposits now required many can't meet these rates. 

What do you mean by "many"? 

I'm sure you're right that 'some' people have mortgages for 30/35 years, but I'm equally sure that 'some' people pay off their mortgages well before the original term.  I was mortgage-free after nine years, though I then chose to move again which required a new mortgage.  I paid off that mortgage in 15 years.  This forum is full of people determined to be mortgage-free and documenting how they are working towards it or have already achieved it, so it can be done. 

Sure it will be tougher for some people than others (just as life in general), but if we ignore the extreme cases at both ends of the income spectrum there is the majority of home-buyers who COULD pay off their mortgage earlier than term if they chose to.  Some do choose exactly that, perhaps as part of a plan to retire early, other choose differently and prefer (perhaps) to buy new cars every other year, take lavish holidays, and are happy to keep working into their 70s to fund it all.

That's fine by me, because I'm not here to tell anyone how they SHOULD spend their money, but I think it's reasonable to point out how they COULD spend their money.  The best choices are informed choices and learning from the experience of others.  Discussion forums allow people to share their own experiences so that others can learn about alternative choices.  If they don't like the sound of them then fine, ignore them, but at least be honest enough to acknowledge them.

Mickey666

annabanana82 said:

My Brother is a ham fisted baboon when it comes to anything financial or administrative. If he's managed to keep his mortgaged home for 17 years then I'm not sure repossession really needs to register as a risk for the vast majority of the population.

. . . a "ham fisted baboon" who is well on his way to having zero housing costs within sight and all the financial freedom and choices that brings - so let's hear it for all the "ham fisted baboons" out there!