Wednesday, Apr 07, 2010
Use your mortgage to beat inflation
MoneyWeek: Use your mortgage to beat inflation
If you've got a mortgage, it's time to think about inflation. With UK Government debt now standing at £857.5 billion, it's likely that our government will encourage inflation at some point. How else are they going to clear this great big debt?
Posted by damien @ 03:59 PM (2017 views) Add Comment
15 Comments
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1. fallingbuzzard said...
I think they will inflate everything away, but in about 10 years time when they don't need to borrow anything substantial.
2. estrader said...
Anybody who buys a house on the basis of this article is a property SPECULATOR. You may just as well buy gold or silver or internet stocks because someone says they are going to go up in value. The internet is littered with people who gladly tell you how to make £millions, simples.
3. paul said...
I'm not sure that the government inflating away the debt is going to be as simple as MoneyWeek might like to think.
What happens when investors take fright and the costs of our government bonds goes through the roof?
4. mr g said...
@Paul "I'm not sure that the government inflating away the debt is going to be as simple as MoneyWeek might like to think."
I don't always agree with your views but I'm in 100% agreement with you on this one.
Whoever forms the next government simply will not be able to use inflation to reduce debt. This poxy government has got away with it's criminal actions so far, but investors are waiting to see the outcome of the election and expect whoever takes power to bite the bullet and impose cuts.
If cuts are not forthcoming unilaterally then the markets will impose them by one means or another.
5. devo said...
uk citizens don't want cuts
6. landofconfusion said...
While I agree with the above comments, isn't most UK government debt index-linked? Also, wouldn't trying to inflate your way out of this lead to higher IR's for everyone?
7. mdmick said...
The title is 'use your mortgage to beat inflation'.
The content is 'heads or tails?'
I don't think the article mentions 3 x salary or any lending ratio for taking on a mortgage.
If salaries did not rise in line with inflation then maybe property prices would not either.
I just feel that the article is a bit like homeworks I used to do at school: write a few lines and get away with it.
8. tenyearstogetmymoneyback said...
Paul said
"What happens when investors take fright and the costs of our government bonds goes through the roof?"
mdmick said "I don't think the article mentions 3 x salary or any lending ratio for taking on a mortgage."
I was just thinking the same thing myself. On Black Wednesday I was the smug person with an 11% fixed rate mortgage
(and before anyone comments I didn't loose out on that deal, although the subsequent 30% drop in house prices was a real pain).
9. Essexman said...
estrader said...
Anybody who buys a house on the basis of this article is a property SPECULATOR.
I say - anyone who buys a house and expects it to rise in value above the long term average is a property speculator - regardless of the information they acted upon.
10. alan said...
Don't spoil it everyone!
UK voters want more services. They also want to pay less Income Tax, Council Tax and VAT.
They want their houses to go up in price YOY, sleeping soundly in their beds with more bobbies on the beat.
Boomers want to invest money and sit in a comfy armchair, watching it grow.
Oh, and young girls want to get pregnant and have a nice council flat kitted out for them.....and so on
11. markj69 str05 said...
If people can afford to pay down their debt as much as they have done, then surely the greedy rationale should be thst people have enough money to pay a little more on interest???
It certainly insn't going back in to help economic recovery. Put it up a couple of percent. It'll still be relatively low.
12. paul said...
It certainly insn't going back in to help economic recovery. Put it up a couple of percent. It'll still be relatively low.
Indeed. The Bank of England hasn't yet worked out that the extra money they're shovelling at borrowers is not making a jot of difference to the spending figures.
And this, boys and girls is why we can't inflate away our debt ...
13. mander said...
But inflation is taking everyone to square one what was the point to have had created this bubble? Supposedly some people got rich by having their assets inflated in value why would they flirt with inflation now that will destroy their wealth? I think inflation will mean wealth destruction for the West because the West is overdeveloped and inflation will not create new development opportunities.
What we need is value for money and that includes property not inflation/deflation/currency manipulation.
14. markj69 str05 said...
'what was the point to have had created this bubble?'
Who ever said there had to be a point? I suspect that low IR's were used to stimulate the markets and economy in general. 'Look at what a wonderful gov't we are! Everything is great!'. Unbeknown to the creator that the monster would break loose, and become un-controllable. On the other hand, the gov't may have been played a bit by the financial industry. Too big to fail = Licence to print money. High risk behavious, with low risk accountability. win/win situation, gambling with someone elses money, and if you loose, you stil get a whacking bonus.
15. markj69 str05 said...
License!