zzg113

" It's Different This Time"

39 posts in this topic

[quote name='non-FTBer' date='Mar 2 2005, 01:56 PM']If every OO in the UK fixed their mortgage for full term during 2003 and didn't MEW then just maybe your argument could hold up. But they didn't, infact very, very few did.[/quote]

Ahhhhh,

My point is that current buyers can fix at good and historically low rates, so the fact rates may rise is not a deterrent to buy.

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[quote name='dogbox' date='Mar 2 2005, 02:03 PM']Ahhhhh,

My point is that current buyers can fix at good and historically low rates, so the fact rates may rise is not a deterrent to buy.
[right][post="77637"]<{POST_SNAPBACK}>[/post][/right][/quote]

I have to agree I'm amazed there was so litle take up of the 25 yr fixed mortgages at 5% that were available a few years ago.

It seems to me that most people believe low-ish interest rates are here to stay for a while.

(Please no-one come back and say that with low inflation real rates are quite high)

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[quote name='nickd' date='Mar 2 2005, 01:58 PM']I think his comment about SIPPs is interesting. Even if they have been fairly dismissed on this forum as a distraction and irrelevance, perhaps joe public ignorantly thinks they will make a difference.[/quote]

I called a specialist SIPPS firm in Leicester to get the facts. I was told u can borrow 75% of a property value via mortgage as long as 25% sum was held in cash in a SIPP.

Bears often say people need huge sums in SIPPs but if the above advice is correct this is not the case. There are loads of flats in cheaper areas where the 25% cash portion would only need to be approx £15000. Loads of Self - employed people are piling lump sums into SIPPS according to the advisers, often using property equity drawings.

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[quote]I called a specialist SIPPS firm in Leicester to get the facts. I was told u can borrow 75% of a property value via mortgage as long as 25% sum was held in cash in a SIPP.[/quote]

Yes, these are the CURRENT rules (which only apply to commercial property, not residential).

When the NEW SIPP rules are introduced in April 2006 you will only be allowed to borrow 50% of the sum of cash in the fund (e if you have £100k in the fund you will only be llowed to buy a property for a maximum of £150k, if you have £200k you can only buy a property for a maximum of £300k, etc) to buy residential property.


[quote]if the above advice is correct[/quote]

It is not.

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[quote name='dogbox' date='Mar 2 2005, 03:03 PM']Ahhhhh,

My point is that current buyers can fix at good and historically low rates, so the fact rates may rise is not a deterrent to buy.
[right][post="77637"]<{POST_SNAPBACK}>[/post][/right][/quote]

Ahhh,

My point is that while long term fixed rates are available to todays FTBer, they are at significantly higher rates than many other mortgage products that are available. If people are stretching themselves, and affordability, in order to buy... guess which mortgage they choose???

Most are going for short term discounted rates with nasty tie ins to SVRs.
Oh, and many are only managing to get these on IO mortgages.

The public just aren't looking at future affordability when taking out these mortgages, they are only working out what it costs them each month when they first start paying.... end of discounted rates, IR rises - they'll deal with those later.


I know of several people who are buying at present (not good, I know). Both are buying a place that is at a better price than last year by a significant amount (due to falling HPs). But they have both taken on IO mortgages on initial discounted rates, as that is the only way they can afford the monthly repayments.

What happens to them when IRs rise?
Or taxes rise?
Or the price of goods goes up faster than the inflationary measure (and their wages)?

Can you answer that dogbox, can you? :P :P :P :P

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[quote name='dogbox' date='Mar 2 2005, 12:53 PM']More singles

[right][post="77577"]<{POST_SNAPBACK}>[/post][/right][/quote]

Yet in another thread you state that on the basis of 2 incomes affordability is no problem.

Your points are poorly thought out and contradictory at best.

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[quote name='dogbox' date='Mar 2 2005, 12:53 PM']B2L are stubborn long - termists

[right][post="77577"]<{POST_SNAPBACK}>[/post][/right][/quote]

I find the mantra 'i'm in it for the long term' utterly fascinating. The BTL herd appear to have no concept of trading and rotating investments to achieve better returns and appear to employ no trading or stop-loss strategy to what are effectively leveraged investments. I hear that 1/5 of all BTL are now subsidising their 'investments' on a monthly basis.

If a company in which I own shares came knocking at my door for money every month, I would have no hesitation in 'releasing the hounds'.

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I think there is a strong economic argument for house prices going nowhere in the next 20 years - see my signature. Long term investment my @rse!

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[quote name='munimula' date='Mar 2 2005, 02:40 PM']I think there is a strong economic argument for house prices going nowhere in the next 20 years - see my signature. Long term investment my @rse!
[right][post="77662"]<{POST_SNAPBACK}>[/post][/right][/quote]

This is really going to screw the ppl who opted out of a pension for bricks & mortar.

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[quote name='munimula' date='Mar 2 2005, 02:40 PM']I think there is a strong economic argument for house prices going nowhere in the next 20 years - see my signature. Long term investment my @rse!
[right][post="77662"]<{POST_SNAPBACK}>[/post][/right][/quote]
Your signature implies that house prices will more than double over the next 20 years. That zero growth you mention is zero growth after inflation. 2% inflation per year for 20 years adds 121% to house prices over that period -- not quite "going nowhere". Although not a good return on investment, either.

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[quote name='zorn' date='Mar 2 2005, 02:54 PM']Your signature implies that house prices will more than double over the next 20 years. That zero growth you mention is zero growth after inflation. 2% inflation per year for 20 years adds 121% to house prices over that period -- not quite "going nowhere". Although not a good return on investment, either.
[right][post="77671"]<{POST_SNAPBACK}>[/post][/right][/quote]

Your argument is just about justifiable for someone who bought there house entirely for cash, but for the vast majority of buyers they will be paying interest rates well above the rate of inflation on the mortgage, so even if hp grow at 0 versus inflation the home owner has still handed over tens of thousands to the bank in interest.

On a £150k initial mortage about £80k worth at current rates. That's quite a loss!!!

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[quote name='zorn' date='Mar 2 2005, 03:54 PM']Your signature implies that house prices will more than double over the next 20 years. That zero growth you mention is zero growth after inflation. 2% inflation per year for 20 years adds 121% to house prices over that period -- not quite "going nowhere". Although not a good return on investment, either.
[right][post="77671"]<{POST_SNAPBACK}>[/post][/right][/quote]
If it's only gone up with inflation then it hasn't actually gone up in value in relation to all other costs so I'd say that's 'going nowhere', as an investment it won't have made you anything over inflation.

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[quote name='zorn' date='Mar 2 2005, 02:54 PM']Your signature implies that house prices will more than double over the next 20 years. That zero growth you mention is zero growth after inflation. 2% inflation per year for 20 years adds 121% to house prices over that period -- not quite "going nowhere". Although not a good return on investment, either.
[right][post="77671"]<{POST_SNAPBACK}>[/post][/right][/quote]

I'm going straight to the shops to buy up all their bread which i'll then freeze for 20 years. Then I'll defrost it and sell it for at least double what I paid. Foolproof investment and of course there's no chance of a bread price crash.

Money illusion is one hell of a concept, dont you think?

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[quote name='non-FTBer' date='Mar 2 2005, 02:24 PM']Ahhh,

My point is that while long term fixed rates are available to todays FTBer, they are at significantly higher rates than many other mortgage products

Most are going for short term discounted rates with nasty tie ins to SVRs.

What happens to them when IRs rise?
Or taxes rise?
Or the price of goods goes up faster than the inflationary measure (and their wages)?

Can you answer that dogbox, can you? :P  :P  :P  :P[/quote]

5 year fixed rate Nationwide - 4.95%
5 year fixed rate Northern Rock 5.19% (or 10 yrs +)

As for discounted rates no one I know plumps for one with a tie - in after the discount ends, they simply remo.

Your problem is u see the world as a place of danger and risk where everything has a downside. Doesnt look like you will setting up your own business, errr ... ever.

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