Interest Rates rise again
11 January 2007, 07:40 PM
#121
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Obviously, you should always give yourself 'leeway' each month incase of rises etc. but to what degree? At some point things become too much. As I said, not just mortgage debt, but the bills that are always rising, rising food costs, increasing travel expenses, all only going up a 'little' each month but add them up and compare them to 1/2/3 years ago and you'll realise why a lot of people are feeling the pinch, even those who hadn't stretched themselves 3 years ago are being pinched. more and more people fall into the 'pinch zone' each time there's a rate rise, leccy bills go up, council tax goes up etc. Please note that all the above things are essentials that we all have to pay. Quite often these things are hidden (Ddebits, standing orders etc.) if you don't pay by cheque every month (who does?!) and people often realise later than they anticipated.
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11 January 2007, 08:13 PM
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11 January 2007, 08:47 PM
#126
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Surely getting your first should be a the first thing on the agenda laddy?
Aldridge Pryor - Wikipedia, the free encyclopedia
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11 January 2007, 08:51 PM
#127
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I clicked the thread particularly to read your comment AudiLover as I noticed that you were the most recent to reply, and then to see you replying to me personally, I'm infatuated 
11 January 2007, 08:58 PM
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11 January 2007, 09:58 PM
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So all those predicting this huge property price crash, when exactly do you predict its going to happen because its been banded about on SN for years and years and its never happened and each year goes by with no crash but so many still go on about it happening?
Open your eyes there is no dream property price crash looming so all those waiting for it are just losing out as the prices go up and up making it more difficult to get on the housing ladder.
Open your eyes there is no dream property price crash looming so all those waiting for it are just losing out as the prices go up and up making it more difficult to get on the housing ladder.
Clearly average Joe loves house price inflation (eg davyboy) as it makes them 'feel' rich, they can brag about how much theyve 'made' on their property, borrow against its inflated price which in turns boosts the economy. The rises have been largely down to investment money entering the market and once these unsustainable rises stop investment money will leave the market and it will become a viscious cycle when the falls begin- just look at what always happens.
Interesting to read the comments on BBC website - seems people have woken up to the fact that inflation has been running at far far more than 2-3% for the last few years and now we will start to pay the price...
11 January 2007, 10:15 PM
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Sure if it happens you can say I told you so, but thats like a Jehovas Witness saying the earth will end........at some point it will.
11 January 2007, 10:20 PM
#136
So all those predicting this huge property price crash, when exactly do you predict its going to happen because its been banded about on SN for years and years and its never happened and each year goes by with no crash but so many still go on about it happening?
Open your eyes there is no dream property price crash looming so all those waiting for it are just losing out as the prices go up and up making it more difficult to get on the housing ladder.
Open your eyes there is no dream property price crash looming so all those waiting for it are just losing out as the prices go up and up making it more difficult to get on the housing ladder.
Have people already forgotten about 1989-1995? Bloody hell, I was only 10 in 1989, living in a different country and I still remember
Anyway, do you think that house prices can continue increasing faster than wages indefinitely?
11 January 2007, 10:23 PM
#137
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The property crash has been predicted for some time for good reason, and its not a case of "if it doesnt crash next year then it wont ever crash"! This countries finances (both government and personal) are in a horrendous state, and its difficult to imagine how things will just get back to normal in a painless fashion - it just doesnt ever happen.
Clearly average Joe loves house price inflation (eg davyboy) as it makes them 'feel' rich, they can brag about how much theyve 'made' on their property, borrow against its inflated price which in turns boosts the economy. The rises have been largely down to investment money entering the market and once these unsustainable rises stop investment money will leave the market and it will become a viscious cycle when the falls begin- just look at what always happens.
Interesting to read the comments on BBC website - seems people have woken up to the fact that inflation has been running at far far more than 2-3% for the last few years and now we will start to pay the price...
Clearly average Joe loves house price inflation (eg davyboy) as it makes them 'feel' rich, they can brag about how much theyve 'made' on their property, borrow against its inflated price which in turns boosts the economy. The rises have been largely down to investment money entering the market and once these unsustainable rises stop investment money will leave the market and it will become a viscious cycle when the falls begin- just look at what always happens.
Interesting to read the comments on BBC website - seems people have woken up to the fact that inflation has been running at far far more than 2-3% for the last few years and now we will start to pay the price...
It doesn't help when the rich make their own markets. When I lived in Tunbridge Wells the local papers were running articles on why the house prices were going up so fast in the area, London traders were coming down and buying up all the property therefore restricting what was avaialble and forcing up the prices. They were making money from renting out while their property portfolios were sky rocketing. To get the prices down you needed to flood the market and that just isn't easy with the property market.
11 January 2007, 10:45 PM
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I am sure we are still paying off the billions that Lamont wagered on our behalf betting against the whole of the European Markets
11 January 2007, 10:45 PM
#139
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When my folks moved to Cornwall in 1989, they bought a nice house for £220k (got a proper house in those days).
The house in Surrey was worth about £300k and should have sold very quickly so they got a bridging loan (!).
18 months later it sold - The loan was £3k a month, the house market had crashed and the Surrey place was worth £230k.
So they bought at the peak, sold at the slump and lost rather a large chunk of cash (in those days) - DOH!!!!
Took a wee while to recover from that one!
The house in Surrey was worth about £300k and should have sold very quickly so they got a bridging loan (!).
18 months later it sold - The loan was £3k a month, the house market had crashed and the Surrey place was worth £230k.
So they bought at the peak, sold at the slump and lost rather a large chunk of cash (in those days) - DOH!!!!
Took a wee while to recover from that one!
11 January 2007, 10:47 PM
#140
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The bottom line is first time buyers can't afford to buy houses and the cost of borrowing money for their first time mortgages just went up!
Prices will have to correct themselves.
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11 January 2007, 10:47 PM
#141
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What if a combination of interest rate rises and tighter lending criteria reduce the available funds that push up prices?
What if low yields for landlords, combined with higher interest rates and question marks over whether this endless capital appreciation can continue lead to sales?
What if buyers like myself who are deliberately sitting out of the market with equity that is sitting in ever increasing interest rate savings accounts after having enjoyed eight years of explosive house price growth are only prepared to offer for properties when they become a more realistic comparison with rents?
What if low yields for landlords, combined with higher interest rates and question marks over whether this endless capital appreciation can continue lead to sales?
What if buyers like myself who are deliberately sitting out of the market with equity that is sitting in ever increasing interest rate savings accounts after having enjoyed eight years of explosive house price growth are only prepared to offer for properties when they become a more realistic comparison with rents?
11 January 2007, 10:51 PM
#142
Its simple economics, the housing market wont crash until there are more properties on the market than there are buyers. There just aren't enough properties which is why prices are so high, build 500,000 new homes in England all at the same time and sell them below market value then you will see the house prices drop to re-align to the selling price of the new houses. As thats not happening currently then there isn't going to be any house price drop any time soon.
It doesn't help when the rich make their own markets. When I lived in Tunbridge Wells the local papers were running articles on why the house prices were going up so fast in the area, London traders were coming down and buying up all the property therefore restricting what was avaialble and forcing up the prices. They were making money from renting out while their property portfolios were sky rocketing. To get the prices down you needed to flood the market and that just isn't easy with the property market.
It doesn't help when the rich make their own markets. When I lived in Tunbridge Wells the local papers were running articles on why the house prices were going up so fast in the area, London traders were coming down and buying up all the property therefore restricting what was avaialble and forcing up the prices. They were making money from renting out while their property portfolios were sky rocketing. To get the prices down you needed to flood the market and that just isn't easy with the property market.
I personally believe that people (in general) will borrow as much as they can afford and pay as much for a house as they can borrow (or close to), and therefore I believe that the house prices are so high at the moment because interest rates have been so low for so long.
When interest rates rise, people can borrow less and therefore the houses they would have bought will either remain unsold or sold at a lower price.
Furthermore, I believe that the stockbroker effect is greatly overestimated down south. There are not *that* many people working in the city, and nowhere near all of those working in the city get big bonuses to spend on houses.
Houses take a long time to sell at the moment. I don't think that points to lack of supply in the market for the buyers that are around. I think it points to the houses on the market being too expensive for buyers to afford them
11 January 2007, 10:54 PM
#143
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When my folks moved to Cornwall in 1989, they bought a nice house for £220k (got a proper house in those days).
The house in Surrey was worth about £300k and should have sold very quickly so they got a bridging loan (!).
18 months later it sold - The loan was £3k a month, the house market had crashed and the Surrey place was worth £230k.
So they bought at the peak, sold at the slump and lost rather a large chunk of cash (in those days) - DOH!!!!
Took a wee while to recover from that one!
The house in Surrey was worth about £300k and should have sold very quickly so they got a bridging loan (!).
18 months later it sold - The loan was £3k a month, the house market had crashed and the Surrey place was worth £230k.
So they bought at the peak, sold at the slump and lost rather a large chunk of cash (in those days) - DOH!!!!
Took a wee while to recover from that one!
11 January 2007, 11:00 PM
#144
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When the banks tighten up on lending because theyre losing so much on bad debts how will people pay for the massively overpriced houses? (as Henrik also points out) Supply/demand will not stop house prices crashing, as much as mortgage lenders and people peddling BTL's would love to have you believe.
11 January 2007, 11:00 PM
#145
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What if a combination of interest rate rises and tighter lending criteria reduce the available funds that push up prices?
What if low yields for landlords, combined with higher interest rates and question marks over whether this endless capital appreciation can continue lead to sales?
What if buyers like myself who are deliberately sitting out of the market with equity that is sitting in ever increasing interest rate savings accounts after having enjoyed eight years of explosive house price growth are only prepared to offer for properties when they become a more realistic comparison with rents?
What if low yields for landlords, combined with higher interest rates and question marks over whether this endless capital appreciation can continue lead to sales?
What if buyers like myself who are deliberately sitting out of the market with equity that is sitting in ever increasing interest rate savings accounts after having enjoyed eight years of explosive house price growth are only prepared to offer for properties when they become a more realistic comparison with rents?
The fact is the country is richer now than it has ever been, rich people don't care about mortgage rates and pay what they think a place is worth and buy it outright. Add to that the ridiculous lack of housing avaialble on the market then prices wont fall. None of the factors you mention are going to change the fact that there isn't enough houses on the market, demand outstrips supply. Even with first time buyers priced out the market and reducing demand has this made a jot of difference? No, there is still huge demand for housing over and above what is avaialble.
11 January 2007, 11:05 PM
#146
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Are you serious?!! Everything is based on debt - the countries assets (such as its gold reserves) have been sold off by Labour, real wages have been falling for some time, national debt is spiralling (as is consumer debt).
Clearly GB's illusion of a booming economy and "you've never had it so good" is believed by some
Clearly GB's illusion of a booming economy and "you've never had it so good" is believed by some
11 January 2007, 11:06 PM
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11 January 2007, 11:14 PM
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Are you serious?!! Everything is based on debt - the countries assets (such as its gold reserves) have been sold off by Labour, real wages have been falling for some time, national debt is spiralling (as is consumer debt).
Clearly GB's illusion of a booming economy and "you've never had it so good" is believed by some
Clearly GB's illusion of a booming economy and "you've never had it so good" is believed by some
I'm talking about people with jobs, especially those in London with very high paid jobs. Bonuses in the city are enormous. There are a lot more traders/investment banker types than you seem to realise. These people are the ones who buy up property and affect prices by restricting whats available. The pub my parents were in new years eve was out in a village in east sussex, there was a worker from Merrill Lynch in the pub who had just got his £6m bonus for the year. He has bought up over half the village in the last few years and has bought the majority of land between that village and the next. It is these types who couldn't give a flying toss about mortgages and interest rates who buy property unafffected by the bank of england. All the time they are buying property there is less about for everyone else and prices stay high.
11 January 2007, 11:26 PM
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However, to buy a house like the one I'm renting I would not only be paying out the same amount as my rent on a 40% interest only mortgage, I would also not be getting interest on the 60% equity I would have put in.
The present rental yield situation is so favourable that even with modest ongoing house price inflation it is still cheaper to rent.
This underlines the ridiculous nature of the present valuations, landlords are taking losses to benefit from capital appreciation. Absolute classic bubble whatever type of asset, stocks, property etc. Even worse with property because people gear up (mortgage) to do it.
I'm a believer in property over the long term, I'll be believing more in it when everyone else thinks it is rubbish though! That is the real time to buy.
Last edited by john banks; 11 January 2007 at 11:33 PM.
11 January 2007, 11:31 PM
#150
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Yep JB is right but it depends on area.
Our rent - £1000pcm.
House value about £600k.
Interest only mortgage would be £3000++ a month with a £70k++ deposit.
It's wholly owned and on a long contract so no risk of a rent rise.
So that "deposit" is in the bank earning an worry free near 6%.
Might seem dumb to some, but not to us!
Our rent - £1000pcm.
House value about £600k.
Interest only mortgage would be £3000++ a month with a £70k++ deposit.
It's wholly owned and on a long contract so no risk of a rent rise.
So that "deposit" is in the bank earning an worry free near 6%.
Might seem dumb to some, but not to us!