Debate House Prices


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"Interest rates are low"

FT - New consensus on market slowdown
Capital Economics argued recently that it was flawed to take comfort from the fact that low interest rates compared with the late 1980s had raised housing’s affordability. Ed Stansfield, of Capital, notes that lower expected inflation will prolong the years when mortgages impose a high cost on households’ finances and, if mortgages are judged on the basis of the full life of a mortgage, housing affordability has never been worse.

No comment needed...
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Comments

  • WTF?_2
    WTF?_2 Posts: 4,592 Forumite
    FT - New consensus on market slowdown



    No comment needed...


    Remember folks: A mortgage is for life.
    --
    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.
  • JonnyBravo
    JonnyBravo Posts: 4,103 Forumite
    Mortgage-free Glee!
    !!!!!!? wrote: »
    Remember folks: A mortgage is for life.

    Eh?

    Rubbish.

    The quote only reaffrims why it's good to overpay and get it gone. ie inflation helps you less than in the past
  • WTF?_2
    WTF?_2 Posts: 4,592 Forumite
    JonnyBravo wrote: »
    Eh?

    Rubbish.

    The quote only reaffrims why it's good to overpay and get it gone. ie inflation helps you less than in the past

    I was being sarcastic and highlighting that for most people, a mortgage is pretty much for 20-25 years. With FTBs waiting increasingly until their 30's, that is most of the rest of their working life.

    Personally I'm all for overpaying but I would suggest that the trend amongst the general public is putting off paying down the mortgage with ever more 'fixed rate' 2 year refinances. This essentially ends up stretching out the debt as with most of these deals you'll hardly have made any reduction on the principle borrowed by the time you factor the 'arangement fee' into deal.

    Also, if you start taking steps up the ladder (and with the market costing so much to enter it's all about a ladder these days) to bigger and better houses that means taking on even more debt and probably delaying the day when you are mortgage free. An effect exacerbated by the recent house boom.
    --
    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.
  • JonnyBravo
    JonnyBravo Posts: 4,103 Forumite
    Mortgage-free Glee!
    !!!!!!? wrote: »
    I was being sarcastic and highlighting that for most people, a mortgage is pretty much for 20-25 years. With FTBs waiting increasingly until their 30's, that is most of the rest of their working life.

    So you weren't being sarcastic?
    Who knows?

    !!!!!!? wrote: »
    Personally I'm all for overpaying but I would suggest that the trend amongst the general public is putting off paying down the mortgage with ever more 'fixed rate' 2 year refinances. This essentially ends up stretching out the debt as with most of these deals you'll hardly have made any reduction on the principle borrowed by the time you factor the 'arangement fee' into deal.

    The quite large arrangement fees we see are a relatively new phenomona. These have appeared as the margins (vs BoE and LIBOR) shrank and shrank.
    In the past the fees were only a few hundred and the %age rate was larger. It doesn't matter which way it is so long as people do their sums to work out what makes sense for them.
    The only way it stretches it out is if you extend the term when you remortgage.

    !!!!!!? wrote: »
    Also, if you start taking steps up the ladder (and with the market costing so much to enter it's all about a ladder these days) to bigger and better houses that means taking on even more debt and probably delaying the day when you are mortgage free. An effect exacerbated by the recent house boom.

    Agreed.
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