Today's Interest Rate Reduction (Merged)
#121
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Theoretically, I'm worse off if the savings rates drop. I'm earning less interest, therefore I have less money.
Putting money away every month to buy a new house once the prices have fallen to normal levels. Hopefully in 2 to 3 years time.
#124
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How come Labour are involved? - I don't care if prices never recover - Hopefully the house will be sold by my kids in 40 or 50 years time when I am in a box. There would have to be a serious amount of going pear shaped before I couldn't pay the mortgage, but her indoors works for the NHS and could probably make the payments herself if I was on zero income. I have insurance that would cover my income for 2 years if I become unemployed, or until 65 if I am too ill to work.
So yes, there is a set of circumstances where I would be forced to sell. (My company goes down the tubes, I can't find anything to do for two years and the NHS decides to start making specialist nurses redundant. What would you do if you and your wife both lost their jobs? Who would pay your rent then?
So yes, there is a set of circumstances where I would be forced to sell. (My company goes down the tubes, I can't find anything to do for two years and the NHS decides to start making specialist nurses redundant. What would you do if you and your wife both lost their jobs? Who would pay your rent then?
Oh and NL created this current climate - and will have put serious pressure on the BoE to "fix" it...
#125
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giant mortgage here... I'm on a 2 yr BOE - 0.31% tracker which ends in June 09, and then it turns into a BOE + 1% for the life of the mortgage.
this cut of 1.5% just saved me £625 a month.
I predict that we will go through a similar stale period like Japan have, with interest rates falling to 1% late next year and staying below 2.5% for 10 years...but then I would say that wouldn't I
ps - I see 3m Libor cut to 4.49 from 5.56 yesterday
The spread dif between 1yr libor and 12m gbp swap vs SONIA was normally around 0.2 before the crunch, and we've seen this spread go to 3.2, so its going to take months before this comes down to even 0.7 which is what we saw at the start of 08. We'll never go back to the 0.2 days again, and so we'll never get such good mortgage deals anymore.
this cut of 1.5% just saved me £625 a month.
I predict that we will go through a similar stale period like Japan have, with interest rates falling to 1% late next year and staying below 2.5% for 10 years...but then I would say that wouldn't I
ps - I see 3m Libor cut to 4.49 from 5.56 yesterday
The spread dif between 1yr libor and 12m gbp swap vs SONIA was normally around 0.2 before the crunch, and we've seen this spread go to 3.2, so its going to take months before this comes down to even 0.7 which is what we saw at the start of 08. We'll never go back to the 0.2 days again, and so we'll never get such good mortgage deals anymore.
Last edited by Ted Maul; 07 November 2008 at 02:00 PM.
#126
We could survive for comfortably about 15 years if our income stopped at current spending levels - which we keep low. If we had to, we'd rent somewhere cheaper. We run a PR firm - which is doing fine but could easily go **** up - see we are under no illusions unlike about 90% of the population. If earnings go up, we save more. If they take a dip, we spend less. You seem to be pretty confident that you are taking no risks at all. Hmm...
Oh and NL created this current climate - and will have put serious pressure on the BoE to "fix" it...
Oh and NL created this current climate - and will have put serious pressure on the BoE to "fix" it...
I don't think that I am taking no risk. I think I am taking a managable risk. Same as I do every time I get in the car, same as I do every time I eat something. If I said my mortgage was for 40k, would you think I am taking the same risks?
Basically, your view of acceptable risk is different to mine. That doesn't mean that one of us is right and the other one is wrong. I am comfortable with my situation, just like you are comfortable with yours, so I can't see why you feel the need to repeatedly point out that you are right and everyone else is wrong. (unless you have some kind of chip on your shoulder and can only accept the fact that everyone who doesn't follow in your footsteps is heading for disaster)
So how did labour cause the global recession?
#127
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Fast Bloke - good points well made about perceived levels of risk.
Labour helped enormously - encouraged reckless banking tactics, bailed out the banks causing a huge increase in national debt, overtaxed fuel, encouraged silly mortgages and loans, stifled UK farming and manufacturing by getting into bed with supermarkets and over relying in imports, etc,etc. I actually support much of what they do but they really have helped this "issue" which although considered global, still could have been managed better on a national level.
Labour helped enormously - encouraged reckless banking tactics, bailed out the banks causing a huge increase in national debt, overtaxed fuel, encouraged silly mortgages and loans, stifled UK farming and manufacturing by getting into bed with supermarkets and over relying in imports, etc,etc. I actually support much of what they do but they really have helped this "issue" which although considered global, still could have been managed better on a national level.
#128
Fast Bloke - good points well made about perceived levels of risk.
Labour helped enormously - encouraged reckless banking tactics, bailed out the banks causing a huge increase in national debt, overtaxed fuel, encouraged silly mortgages and loans, stifled UK farming and manufacturing by getting into bed with supermarkets and over relying in imports, etc,etc. I actually support much of what they do but they really have helped this "issue" which although considered global, still could have been managed better on a national level.
Labour helped enormously - encouraged reckless banking tactics, bailed out the banks causing a huge increase in national debt, overtaxed fuel, encouraged silly mortgages and loans, stifled UK farming and manufacturing by getting into bed with supermarkets and over relying in imports, etc,etc. I actually support much of what they do but they really have helped this "issue" which although considered global, still could have been managed better on a national level.
#129
I hope so - thats my job
You could equally blame the whole thing on Maggy Thatcher - She started the right to buy process in the 80's. I bet most of the monster mortgages here belong to people in their 30's and 40's. These people grew up watching their parents being given the opportunity to own their own home. So from a young age we have been conditioned to think that owning your own home is an opportunity not to be missed.
Financially I would probably be much better off renting, but I don't want to for pretty much the same reasos that I prefer to be self employed rather than employed. Basically renting from a landlord and being employed by someone else would leave either the landord or the employer in control of the things which are important to me - home and income. Sure you have rights, but if it all goes **** up and your employer or landlord goes bust, you lose your home and your income anyway. At least this way I am in control of all that I can be, even though it costs me more.
It is nice to have some savings to create a buffer, but there has to be a point where you decide to spend it rather than keeping it all until you die. You can't take it with you you know.
(ready for the FB is a control freak replies now )
You could equally blame the whole thing on Maggy Thatcher - She started the right to buy process in the 80's. I bet most of the monster mortgages here belong to people in their 30's and 40's. These people grew up watching their parents being given the opportunity to own their own home. So from a young age we have been conditioned to think that owning your own home is an opportunity not to be missed.
Financially I would probably be much better off renting, but I don't want to for pretty much the same reasos that I prefer to be self employed rather than employed. Basically renting from a landlord and being employed by someone else would leave either the landord or the employer in control of the things which are important to me - home and income. Sure you have rights, but if it all goes **** up and your employer or landlord goes bust, you lose your home and your income anyway. At least this way I am in control of all that I can be, even though it costs me more.
It is nice to have some savings to create a buffer, but there has to be a point where you decide to spend it rather than keeping it all until you die. You can't take it with you you know.
(ready for the FB is a control freak replies now )
#130
#133
1. save up until you can buy it outright
2. Take a loan of which you can comfortably afford the repayments
Of course for low end goods such as Tv's, then option 1 makes total sense, for cars, mortgages, home extensions, major improvements, then 2 can make more sense.
#134
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It's interesting driving round new housing estates. Owners have a brand new home, mortgaged to the hilt, and a piece of sh*t on the driveway as they can't afford a decent car.
I have no sympathy for anyone with 90%+ mortgages. They're all sh*ting themselves that there house isn't worth what they over payed for it in the first place. Sh*tting themselves that that great 2 year fixed deal they had is coming to an end, and the new repayments are more than what they can afford.
As Matteboy says. Don't buy what you can't afford. And that means if rates go up.
#135
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So is it safe to say that its very likely the £ will weaken against the $ given this cut, plus the US election result?
#136
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Our mortgage, at £90k, is roughly half the current market value of our very nice house (not new, but in a good neighbourhood), the drive contains (amongst others) an '88 Nissan Micra, and a '91 Golf 16V. Both of which I own by choice, not because I can't afford to buy anything 'decent'
However, when seen from my perspective, the house is still worth the same £500k that it was worth last year, and the year before that. Purely because since I have neither the need, nor the desire, to sell it, that is what it will cost somebody to acquire it from me
What most people forget, is that just like shares, you can only ever lose money on your house if you sell it for less than you paid for it, or less than you owe on it. If you still own it, you've neither lost, nor gained nothing
#137
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MattW - the trouble is what anyone can "comfortably afford" can rapidly change. I'm sure there are many in jobs they thought were safe that are now out of work - it's happening very quickly all the time. These people haven't built any sort of safety net. Just spent spent spent. Suddenly £1000pcm for a mortgage is a lot when your £50k job goes to the wall and you are out on your ear.
What's happened is we've been buttered up into thinking life is about monthly payments - I know because I have done it. £280pcm on a car? No problem on my £45k salary (for example) - except that the loan is a high APR%, the car halves in value in two years so that comfy £280pcm is actually a £6k asset loss plus £4k in interest - a HUGE dent. Yes the payments seemed fine but the overall loss is huge.
Same with mortgages - pay interest only like so many do and you are paying a HUGE amount to the bank, and getting nothing for it unless it rapidly appreciates!
Anyway, rant over...
What's happened is we've been buttered up into thinking life is about monthly payments - I know because I have done it. £280pcm on a car? No problem on my £45k salary (for example) - except that the loan is a high APR%, the car halves in value in two years so that comfy £280pcm is actually a £6k asset loss plus £4k in interest - a HUGE dent. Yes the payments seemed fine but the overall loss is huge.
Same with mortgages - pay interest only like so many do and you are paying a HUGE amount to the bank, and getting nothing for it unless it rapidly appreciates!
Anyway, rant over...
#138
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I disagree, interest only means you pay less than rent would be on a similar property yet you get the equity when you move. Renting you are paying huge amounts to a landlord and getting nothing in return.
#139
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Bravo - sorry but that is utter gonads.
Interest only mean you are only paying interest. Yes if that home appreciates (which isn't happening for some time to come) you make on it but if it depreciates you are taking a double hit.
Rents are usually lower (well down here anyway) than the equivalent mortgage. In the case of this place, rent is £1000pcm, interest only mortgage would be about £2500-3000pcm but the landlord owns it outright so is not affected by the current climate. Apart from the fact that this place is going down in value fast.
We get a lot in return - no worries, not large expenses on things like a broken boiler or roof (both been replaced recently), flexibility and a whacking great house in a huge riverside plot for very little money. I'd rather that went to a landlord that we get on with than a faceless near criminal bank.
Interest only mean you are only paying interest. Yes if that home appreciates (which isn't happening for some time to come) you make on it but if it depreciates you are taking a double hit.
Rents are usually lower (well down here anyway) than the equivalent mortgage. In the case of this place, rent is £1000pcm, interest only mortgage would be about £2500-3000pcm but the landlord owns it outright so is not affected by the current climate. Apart from the fact that this place is going down in value fast.
We get a lot in return - no worries, not large expenses on things like a broken boiler or roof (both been replaced recently), flexibility and a whacking great house in a huge riverside plot for very little money. I'd rather that went to a landlord that we get on with than a faceless near criminal bank.
#140
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Bravo - sorry but that is utter gonads.
Interest only mean you are only paying interest. Yes if that home appreciates (which isn't happening for some time to come) you make on it but if it depreciates you are taking a double hit.
Rents are usually lower (well down here anyway) than the equivalent mortgage. In the case of this place, rent is £1000pcm, interest only mortgage would be about £2500-3000pcm but the landlord owns it outright so is not affected by the current climate. Apart from the fact that this place is going down in value fast.
We get a lot in return - no worries, not large expenses on things like a broken boiler or roof (both been replaced recently), flexibility and a whacking great house in a huge riverside plot for very little money. I'd rather that went to a landlord that we get on with than a faceless near criminal bank.
Interest only mean you are only paying interest. Yes if that home appreciates (which isn't happening for some time to come) you make on it but if it depreciates you are taking a double hit.
Rents are usually lower (well down here anyway) than the equivalent mortgage. In the case of this place, rent is £1000pcm, interest only mortgage would be about £2500-3000pcm but the landlord owns it outright so is not affected by the current climate. Apart from the fact that this place is going down in value fast.
We get a lot in return - no worries, not large expenses on things like a broken boiler or roof (both been replaced recently), flexibility and a whacking great house in a huge riverside plot for very little money. I'd rather that went to a landlord that we get on with than a faceless near criminal bank.
You don't know my circumstances so can not tell me what I am doing is gonads i'm afraid. Plus I get a lot in return the way I am doing it - 4 bed house with garage and nice garden for the kids whilst i'm the only earner. When the kids go to school and the Mrs starts working we will be in a very different situation.
#141
So rent a house worth a million plus for a grand a month? That is good value.
#142
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Bravo - sorry but that is utter gonads.
Interest only mean you are only paying interest. Yes if that home appreciates (which isn't happening for some time to come) you make on it but if it depreciates you are taking a double hit.
Rents are usually lower (well down here anyway) than the equivalent mortgage. In the case of this place, rent is £1000pcm, interest only mortgage would be about £2500-3000pcm but the landlord owns it outright so is not affected by the current climate. Apart from the fact that this place is going down in value fast.
We get a lot in return - no worries, not large expenses on things like a broken boiler or roof (both been replaced recently), flexibility and a whacking great house in a huge riverside plot for very little money. I'd rather that went to a landlord that we get on with than a faceless near criminal bank.
Interest only mean you are only paying interest. Yes if that home appreciates (which isn't happening for some time to come) you make on it but if it depreciates you are taking a double hit.
Rents are usually lower (well down here anyway) than the equivalent mortgage. In the case of this place, rent is £1000pcm, interest only mortgage would be about £2500-3000pcm but the landlord owns it outright so is not affected by the current climate. Apart from the fact that this place is going down in value fast.
We get a lot in return - no worries, not large expenses on things like a broken boiler or roof (both been replaced recently), flexibility and a whacking great house in a huge riverside plot for very little money. I'd rather that went to a landlord that we get on with than a faceless near criminal bank.
As you mention though, you don't have to pay for a completely new heating system like what I an facing next year if our boiler gets condemned
#144
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The question is better asked would £3000 PCM get you a million pound mortgage.
The answer would be no but I think part of the problem we are in now is that the answer (up until the recent shenannigans) was YES YES YES.
The answer would be no but I think part of the problem we are in now is that the answer (up until the recent shenannigans) was YES YES YES.
#145
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We get a lot in return - no worries, not large expenses on things like a broken boiler or roof (both been replaced recently), flexibility and a whacking great house in a huge riverside plot for very little money. I'd rather that went to a landlord that we get on with than a faceless near criminal bank.
What we get, is our own property and land. A nice little legacy for our kids when we eventually kark it.
I very much doubt that property is ever going to be worthless, so I shall continue to pay my mortgage, happily
#146
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A million quid?! More like £6-700k. 5 bed riverside house overlooking no houses 2 miles from a city in a very desirable (apparently) place with 5 acres - not been valued to guessing but it's worth a fair bit anyway. Yes it's a total bargain but we got lucky.
Bravo - are you on interest only or not? Because interest only means INTEREST ONLY. I.E. You are JUST paying interest to a bank without paying for the actual house itself. If not, then why answer? Interest only is the SAME as rent (i.e. doesn't pay anything off) except paid to a bank, not a landlord.
Yes yes 84 but that's called a REPAYMENT mortgage. What we get is a load of savings, no risk and a nice legacy to leave our little boy because we WORK for money rather than relying on a house to appreciate and get debted up to the eyeballs. Which the kids wouldn't be too happy with if daddy lost his job/company, lost his "owned" house and had it repossessed. I'd prefer not to risk our kids inheritence thanks.
Bravo - are you on interest only or not? Because interest only means INTEREST ONLY. I.E. You are JUST paying interest to a bank without paying for the actual house itself. If not, then why answer? Interest only is the SAME as rent (i.e. doesn't pay anything off) except paid to a bank, not a landlord.
Yes yes 84 but that's called a REPAYMENT mortgage. What we get is a load of savings, no risk and a nice legacy to leave our little boy because we WORK for money rather than relying on a house to appreciate and get debted up to the eyeballs. Which the kids wouldn't be too happy with if daddy lost his job/company, lost his "owned" house and had it repossessed. I'd prefer not to risk our kids inheritence thanks.
Last edited by Matteeboy; 07 November 2008 at 06:21 PM.
#147
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Bravo - are you on interest only or not? Because interest only means INTEREST ONLY. I.E. You are JUST paying interest to a bank without paying for the actual house itself. If not, then why answer? Interest only is the SAME as rent (i.e. doesn't pay anything off) except paid to a bank, not a landlord.
Interest only is not the same as rent Interest only gives you a return as the value of the property increases (which it will long term as historically property always has increased no matter how bad the economy once was). Rent for 25 years and you have nothing left at the end of it to show for your expenditure. Plus round here I will have paid out a lot less in my interest only mortgage than I would have done for renting the same property.
#148
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Good grief you think over the last 20 years your savings will have increased in value more than putting it in property 20 years ago? I'm afraid not as proven to me by my parents house going from what they paid to what they sold it for and compared to how their savings/investments increased over the same period.
Yes property takes a dip periodically but then rises sharply again afterwards. Look at house prices over the last 30 years. There were dips but over the whole 30 year period huge increases in value far outstripping savings/interest rates.
Yes property takes a dip periodically but then rises sharply again afterwards. Look at house prices over the last 30 years. There were dips but over the whole 30 year period huge increases in value far outstripping savings/interest rates.
#149
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Well round here we are paying a lot less for rent than for an interest only mortgage while saving the difference - cash in the bank that doesn't rely on selling a house first. Plus prices are going to do a 1930s/70s depression this time - not a late 1980s recession "dip"
So it sounds like we are both fine.
Have a good weekend!
So it sounds like we are both fine.
Have a good weekend!
#150