Saturday, Nov 17, 2007
Phenominal using the word 'devious', these lenders are running a business what do these commentators expect?
Telegraph: Warning over rate rise by 'devious' lenders
Nearly five million home owners are facing dramatic increases in their monthly mortgage bill next year, as "devious" lenders raise their rates despite the Bank of England signalling that it will cut interest rates. On a fixed-rate deal of 4.95 per cent taken out two years ago, the monthly repayment was £1,031 a month on a £250,000 interest-only mortgage. These payments will shoot up to £1,583 when the deal ends....Some serious pain on the way!
Posted by tyrellcorporation @ 07:32 AM (859 views) Add Comment
15 Comments
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1. confused76 said...
here we go
come repossessions!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
2. speculatorone said...
Have you also noticed the cost of the arrange fees. Some are £2,500.00!! What person takes out a fixed rate for 2 or 3 years and pays that, the cost far outweigh's the discount.
3. tyrellcorporation said...
Hey guys I was beginning to believe it would never happen but I can't help feeling that finally all the conditions are right for HPC, even unemployment is rising now! With high-street lending rates detaching from BoE base rates, even the MPC can't save the housing market now. JOY!
4. sold out said...
Yeeeesssss i agree tyrellcorporation it really does look grim now for homeowners and it looks like the HPC that we have all been hoping for will now finally materialize.Thank god. However i am a little worried about the goverment/BOE next move with regard to IR.If they start cutting rates next year as they have hinted,what will happen to the currency and inflation?Also What can people like myself do to safeguard their savings?
Can anyone explain to me in simple terms because i am an engineer, and really struggle to understand a lot of this economics stuff?
Help!!!!
5. deepak said...
Its called Market mate. It sometimes works for you and sometimes against you.
You need to save for the rainy day. not go on a spending spree.
People who have splurged on vices will face the consequences whether interest rates go up or not.
All parties come to an end.
6. magnifico said...
Sold Out said: " it really does look grim for homeownwers"
Only those who overstreched themselves trying to invest in BTL or keeping up with the Joneses. Those who, like myself, have point blank refused to be drawn into the fashionable thinking according to which mortgages worth 4 or 5 times one's income are acceptable, are sitting now in a not so bad position at all.I'm thinking of putting my house on the market and rent when it's sold.
7. planning4acrash said...
Well, if you're worried about sterling, hedge some of your bets against it, Japanese, Chinese and Euro currency, some commodities should also be a safe haven, as ever, balanced portfolio and some information is dangerous, lots of info is useful.
8. ck one said...
It amazing isn't it, can't you just feel it everywhere, we were right all along and I for one never doubted it.
Every day I meet someone who took the pi** out of me when I carried on renting in 04,05,06 & now in 07. I was a fool because I bought gold, you can't live in gold I was told... Whose sorry now, whose sorry now.......................... Come on, our time is now here and lets tell them!
9. ck one said...
It amazing isn't it, can't you just feel it everywhere, we were right all along and I for one never doubted it.
Every day I meet someone who took the pi** out of me when I carried on renting in 04,05,06 & now in 07. I was a fool because I bought gold, you can't live in gold I was told... Whose sorry now, whose sorry now.......................... Come on, our time is now here and lets tell them!
10. geed said...
Sold Out...amazing how many engineers post on here, I admit it i'm one too.
Does this mean we are fiscally and economicly aware, or have worked out the average salary into average home price doesnt go, or we are not paid as much as we should be so therefore are more sensible with our money, or finally, are we all just a little bit stoopid when it comes to monetry matters so we need constant advice and guidance.....?
One for the shrinks aye...
11. Root said...
Is this housepricecrash.co.uk or engineersanon.com eh?
I'm just lurking, but when I did my Masters year (sometime ago now) we covered a lot business management, marketing and finance. The finance side of things was on the scale of medium, large firms to global economic scale, practice and theory and whilst the medium to large scale stuff made perfect sense, once you get to that upper end of the scale it moves from figures to "value". At the time (several years back) and as it was explained to me, a large chuck of the value of a market was certainly under-pinned by cold figures, but you also have to start using other "tools" to consider factors such as risk, perceived value, current/future revenue/opportunities, market position etc..
Now within all this there are bodies of well defined theory with properly tided down vocabulary (yeah seriously there is a sensible definition of terms like synergy, so much so you can just about measure it) but it's very easy to see how certain, as you call them "VI's" could merrily extrapolate sound economic theory out into complete hocus. From my hard science background (computer engineering and wee bit of electronic) it's pretty easy to spot the cold light of day between a theory, definition or implementation based on scientific principles and those generated purely in and by the interests of people looking to increase their own "value".
It's the filtering down of this distinction and realization through the massed ranks, be they/us the ones in the know (about a subject), those who keep themselves informed (the majority here I suspect) and finally the "sheeple" (I like that term, makes me giggle) that marks the beginning of the end in any economic cycle and I think it's clearly marked now by the the mass media's proliferating use of terms like SIV's, CDO's, IVA's and whatever else you care to mention. It's also irrelevant as to the media's portal of the situation, only that terms like these bubble around. Eventually one will be chosen (see "Negative Equity") and will come to represent what went wrong in that particular cycle, ours will be a close run thing between "Credit Crunch" and "Collateralized Debt Obligation" (by the way... http://en.wikipedia.org/wiki/Collateralized_debt_obligation ...makes for interesting if heavy reading).
Anyway, I'll have a book open for betting on such terms possibly up until the middle of next year. By which time I expect the result will be painfully evident ;^)
12. enuii said...
As engineers perhaps we should watch our backs as the engineers were one of the professions targeted particularly hard during Stalins purges in the Soviet Union.
Perhaps Comrade Brown has our cards marked as dissenters.
13. bidin'matime said...
Geed - there's a saying that if you laid all the economists in the world head to foot, they still wouldn’t reach a conclusion...
I've often said that I've learned more about economics from this blog than I ever learned in three years at university – often it’s the demands of engineers, who are used to absolutes, that drive the thinking towards firm conclusions. It also ensures that the wide range of expertise, held by the many contributors, gets pooled on the site, in an attempt to answer the questions posed, to the benefit of all of us.
So keep asking – none of us knows the answers for sure (it’s the fact that economics isn’t quite so predictable as science that makes it so intriguing..) – but as we each put in our two-penneth, we all profit from the result.
14. bidin'matime said...
Sorry - that should have been directed at Sold Out, who asked the question. Also, sorry for not trying to answer it!
My house fund is mostly in a range of banks and building societies at the moment, with no more than £35k in any one account. Also the maximum in NS&I inflation linked savings as a hedge against sudden inflation and maximum in Premium Bonds for the fun of it (not doing too bad so far) – the NS&I savings are safer even than banks.
I’ve read with interest the suggestions about buying gold – I was tempted a few months ago and now regret not buying, but I think it may fall again in the short term, so I’m holding back. I’ve got my doubts about gold mining shares, as the reserves are drying up and costs are rising, so the risks are getting higher, whilst the same factors will increase the value of solid gold – but then where do you keep it..?
Then there is buying other currencies. But of course, you have to invest in one that is strong enough to do well, even as the $US and £GB go down the pan – could that be the Euro? Maybe. More risky would be Eastern currencies (I invested in Japanese funds 11 years ago when tech stocks had trebled – then watched in dismay as Japan continued to go sideways while tech stocks went on to increase ten-fold by the end of the decade.) The Chinese Yuan seems attractive, but do they have the financial infrastructure to keep it up if the West goes into free-fall?
As P4C suggests, diversification is a good strategy – not too many eggs in one basket – I’ve enjoyed seeing the interest rate rise steadily on my ‘safe’ building society investments and wondered whether it really was worth all the hassle of opening different accounts, but the Northern Wreck episode confirmed that this had been worth it. Now I’m wondering if the interest rates are enough return for the risk involved…
15. Root said...
bidin'matime, as you suggest spreading your bets is always the sensible advice and the obvious way is across currencies. I've got one bunch of five figures tucked up in European stocks and they've been doing reasonably well. I too had the option of going for far eastern shares (only a year or two ago) and wished I gone that way as the profit was nigh double what I had in the euro stuff. It just looks a bit too risky, sooner or later their going to hit serious supply issues as regards power, space, unpolluted air (if you believe those great Sky News shots filled with hazy yellow air).
The other thing to consider is that even if another market is only making minor headway, whilst the one your living in is going backward (hello!) then your apparent wealth will be increasing. This is fine so long as you don't want to emigrate, in fact I'm seriously thinking that some of the recent growth I've seen in European linked investments isn't because of this. Not great really but hey, I'm quite happy leaving it with Europe for now. It's as a few people are beginning to revalue oil in Euro's from Dollars that it could get interesting, consider the effect of a major dollar recession requiring oil's value being moved into Euros would have?