Thursday, May 29, 2008
From April, but worth a read
Times: Revealed: the truth behind the housing market scare stories
The stream of bad news coming out of the housing market has grown into a torrent in recent weeks, with stories of falling house prices, withdrawn mortgage rates and warnings about payment shocks.
Excpet they were never 'stories' - fact is always more surprising than fiction....
Posted by rental john @ 04:47 PM (1047 views) Add Comment
10 Comments
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1. last_days_of_disco said...
Denial is a lovely place to live for a while.
2. titaniccaptain said...
An Egyptian turd hasnt been in denial as much as mosth people in this county
3. doom&gloom said...
Decided to look up the Cheshire BS deal "For those with a 5 per cent deposit there are competitive deals available. The Cheshire Building Society is offering a three-year fixed rate of 5.49 per cent, with a fee of £899."
Can't find the deal on the Cheshire website. The best they can do is a 2yr fix at 5.82%. And the fee is now £999. Can't find the LTV. Quite a change from just one month ago.
4. doom&gloom said...
"However, unless prices start to fall at a consistently fast rate the decision to wait could be a false economy, warns Melanie Bien, of mortgage broker Savills Private Finance. She says that unless you are living with parents, the amount that a prospective buyer pays out in rent, particularly in parts of the Southeast, can offset any decrease in the purchase price of a house. Someone paying £800-a-month rent, for example, would pay an extra £4,000 by delaying a purchase for five months."
Is Melanie Bien stupid or just a liar? Has no one told her that if you take out a mortgage then you will have to pay INTEREST on the debt from day 1 (which is likely to be higher than the equivalent rent)?
5. yorkshireman said...
I am drawn to a paragraph in Ms Bien's article. "Someone paying £800-a-month rent, for example, would pay an extra £4,000 by delaying a purchase for five months."
Someone paying £800 in a mortgage for 5 months, would pay little if anything off the capital sum, assuming she is even advocating a repayment mortgage ? The £4000, plus all the legal costs and set up fees would disappear into the VI's pockets. However, the cloud has a silver lining. It will be better to lose the money on a falling market, than pay it in rent apparently.
You will know my views by now, so sorry to bang on again. The whole rotten system has tried and in some cases succeeded in cutting the throats of ordinary decent, hardworking people. Ms Bien et al should no longer expect the people to stand still and let it happen.
6. paul said...
If they're going to take advice from an Estate Agency's 'Finance' division, then they're hardly going to give an impartial view of the situation.
It is the fact that The Times passes this off as journalism that beggars belief.
7. Zippys said...
ITS TIME THESE MUPPETS HAD A LEGAL WARNING ABOUT MAKING INCORRECT STATEMENTS
8. drewster said...
@doom&gloom,
I wouldn't quite go as far as calling her stupid, but perhaps innumerate. Few journalists have scientific, mathematical, or engineering backgrounds. I can't find any indication of her qualifications, but she is personal finance editor for the Independent on Sunday and also a director at Savills Private Finance (the mortgage broker arm of the Savills estate agents empire).
If you switch from paying £800 a month in rent to buying a property which costs £800 a month interest-only, then you're basically renting from the bank. I like that phrase, "renting from the bank". Maybe I can make it replace "renting is dead money" in the popular imagination.
9. brian t said...
Times? The link takes us to an article in The Independent.
10. brian t said...
Oh, and this business about "paying an extra £4000": no. You WILL make the payments, the only question is whether you make them now or make them later. As already pointed out, nearly ALL of the early payments on a repayment mortgage is interest, not capital, so waiting for better interest rates has the potential to save you thousands per year.
A while ago I drew up a spreadsheet of the amortization (the American term) of mortgages over time, and the total outlay on these long-term mortgages is horrendous. To the Bank, the borrower is effectively a long-term investment for them, one in which they get to set the return on the investment as high as they can, subject to competition.