0.25% cut in BoE base rate

WTF?_2

Generali wrote: »

And, presumably given !!!!!!'s post, the happier !!!!!! will be.

I love capitalism - a free exchange in the market means that both parties' total happiness rises.

Yep. Win-win.

Of course I'd be happier if buying prices were in the 'normal' range but given the silly levels they have been boosted to by cheap money from the reckless banks and clueless borrowers who don't do their sums, it's a very convenient solution for the time being.


Note: In the time I've been renting the house the market value has dropped by maybe 30k or more. It's hard to say because property hasn't been shifting at all round my way since last summer but comparable houses in the street have been up for sale since then and I've seen the asking prices drop by 15-30k on them. Mind you, they still haven't sold

Quite strange going for a walk in the evening ... so many 'for sale' signs and from talking to friends and workmates it seems many tried to cash out but didn't make it in time. It's anecdotal I know but it seems that very, very few regular homeowners came out ahead with the mad price boom. It tended to be the smarter developers that cashed in their chips before the market froze and subsequently fell. A lot of the amateurs got caught holding hundreds of thousands of debt or money-sucking underperforming BTLs and some genuine FTBs who had encouraged 'onto the ladder' are now sitting in negative equity with mortgages about to become unaffordable.

Stevenic

!!!!!!? wrote: »

It tended to be the smarter developers that cashed in their chips before the market froze and subsequently fell.

And they're the ones to watch all you FTB's out there, once they feel that there is value in house prices they'll be in like a shot, cherry picking the best properties from the most desperate sellers.

neverdespairgirl

izzybusy23 wrote: »

And the longer we all rent the happier the bank will be with all the savings we have, instead of paying massively over inflated mortgages on really inadequate little shoe boxes, and in deep debt due to ever spiralling credit cards for those desperately trying TO KEEP UP WITH THE JONES'. :rolleyes:

I think the Joneses come in for unnecessary flak on this board.

I'm mates with a couple of them - they live in a perfectly financially sound way, and don't have new cars / kitchens / etc all the time!

Grade_A_Reject

adr0ck wrote: »

where is my cash !!!!!!

put your money where your mouth is

Can we start a whip round? This is using up my bandwidth.

WTF?_2

JoJoArmani wrote: »

But doesn't recesstion mean job loses and companies going bust etc?

Will we all feel smug and content then with our newly purchased property on the back of the HPC? Or will we be worried sick that we will lose or job and therefore our home?

Warning that a recession/house price crash is very likely does not equal feeling smug if it does or wanting it to happen.

As house prices got more and more out of kilter with reality, a 'correction' was going to have to be bigger and bigger to the point where it would threaten the general economy.


And yes - the worry of losing a home or being made unemployed is what is really going to kick the last vestige of support for prices away.

WTF?_2

Stevenic wrote: »

And they're the ones to watch all you FTB's out there, once they feel that there is value in house prices they'll be in like a shot, cherry picking the best properties from the most desperate sellers.

Smart people in any business have a saying:

"Never catch a falling knife, wait for it to hit the floor first".

If you think intelligent buisiness people are going to pour their cash into a falling asset class in the face of economic hard times you really are in for a bit of a shock.

EdInvestor

Generali wrote: »

I would define liquid as money that you can get back by the end of the day on Friday if you ask for it on a Monday morning without having to take a penalty or reduce the price you sell for. By that definition, endowments and houses are illiquid investments..

You can surrender an endowment and get the money back within a few days and these days the penalty is small, if it exists at all (full accrued terminal bonus is paid out).

Indeed that's what many people should be doing with endowments, as they are obsolete high cost investments which now make poor returns often lower than the interest rate payable on their mortgage.

People would be significantly better off to cash in and use the money to reduce the size of the loan in most cases. This would also boost their LTV status and possibly gain them a lower cost remortgage deal.

It would of course also greatly improve UK debt statistics as there are quite a lot of endowments about.

The life insurers' profits might suffer, of course.:cool:

Datasafe_2

EdInvestor wrote: »

You can surrender an endowment and get the money back within a few days and these days the penalty is small, if it exists at all (full accrued terminal bonus is paid out).

No penalty? I was offered £12000 on a endowment that was worth £21000.

WTF?_2

chinatown wrote: »

Youve really annoyed me with this assumption of my life and the way we choose to deal with our finances. Peoples lives change. We didnt realise that my H would more than likely lose his job in a few months as he works for a major bank whos in deep !!!!!! at the moment. So dont dare make out that we didnt do our sums, and yes £7.50 a week will help us out if worst comes to worst.:mad:

I didn't make any assumptions about your life. I was talking in the general sense.

If you are unfortunate enough to be sitting on a pile of debt with a large chunk of income set to disappear you have my sympathies. But I have to say that it's very unlikely that £7.50 a week is going to be the difference between staying in your house or not given the prospect of a large loss in income and servicing (presumably) substantial debts.

If you don't have sufficient financial provisions to repay the mortgage and you think there's a risk of heavily reduced income better to sell up now while you have equity rather than throw money into negative equity later and lose the house anyway, while remaining in thousands of pounds of debt to the bank.

You know, if prices hadn't been so crazy you wouldn't have had to take on a mind-bending amount of debt to buy a house and maybe something like this wouldn't be such a looming crisis?


That is why there is a lobby of people here decrying high house prices and that is why we are warning anyone thinking of jumping into the market at this point not to do so. Not because we are somehow bitter or angry at not being in that situation ourselves, not because we want to gloat at others getting in to it but to stop people making that mistake in the future.

Stevenic

!!!!!!? wrote: »

If you think intelligent buisiness people are going to pour their cash into a falling asset class in the face of economic hard times you really are in for a bit of a shock.

That's what I said, all the amateurs will be waiting for the bottom of the market and by the time that happens those pros who have sold up in the past couple of years will already be in there grabbing the best plots. This is exactly what happened in the mid 90's and will happen again and then the whole cycle starts again. I know several people in this position who are currently sitting pretty, ready and waiting to pounce with straight cash once the time is right.