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Scooter

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  1. There are only a two good bits in this article; the picture of the two girls at the top (childish but I have needs damn it!), and this little gem:

    ‘And while they save their money and invest in property, they also like to show how well they are doing. Natasha has a love of designer clothes; Ravi lives in a £500,000 penthouse in London Fields.’

    Fair play. Work hard, spend some, save some, date gorgeous woman, sounds great. If there is a correction, then as long as they haven’t geared them selves up to the eyeballs, the future looks pretty bright for this lot.

    I'd like to be an Asian Millionaire!

    Are they supposed to be doing anything that much of the rest of the UK isn't? How much is debt and a few flash trappings, how much is real wealth?

  2. http://business.timesonline.co.uk/article/...2403982,00.html

    The Sunday Times October 15, 2006

    Fears grow over housing boom

    Lenders are relaxing their criteria to stop people being priced out of the market — raising concerns that it could all end in tears. By David Budworth

    Homebuyers and property investors are being driven to desperate measures to get into the market, as some analysts predict a return to double-digit growth next year....../
    This has raised fears that
    some buyers will overstretch themselves
    and struggle with their repayments if the Bank of England is forced to hike interest rates further than expected to halt the mini-boom.
    Alliance & Leicester (A&L)
    recently changed its rules so borrowers, except first-time buyers, do not need to provide proof of their income
    if they can put down a 25 per cent deposit, giving them leeway to inflate their earnings to secure their dream home...../
    :o
    Lenders are also relaxing the rules for buy-to-let borrowers, who can now take out a mortgage
    even if their rent barely covers their interest repayments
    . Landlords could be quickly plunged into losses if interest rates rise, as expected.
    :o

    Funny how the BoE and Gordon do not refer to this crisis? Its an election loser for Gordon when it all does end in tears. :)

    Desperate isn't it? Why would they do it though-they are surely increasing their likelihood of defaults. I suppose they think the buyer's 30% deposit will save them in a forced sale.

    S.

  3. Brilliant!

    He kept buying houses so he could live on the cashback!

    I love the quote, "Buying was easy..."

    And he spent money flying to visit the fixer-uppers be bought unseen.

    Sorry, but the Americans are way more leveraged than the UK. They need a new term, "irrational exuberance" doesn't cover it.

    At least someone offered to pray for him and invited him round to pray with them-God Bless America. :)

  4. Toby and Theo are contributing to the running of the house and thus have a stake in it too!

    Could get messy!

    It already looks pretty messy to me. :) What happens when one wants out? The other is over a barrel and has to pay through the nose to avoid living/owning with a stranger? Who would buy in with a stranger anyway? Idiotic...

    What an utterly utterly utterly pointless article. Where did it come from? I mean, really, what was the point? Girl lives in London, priced out, buys half a house in Nottingham. And? The point being? Really. And yes, Nottingham is currently leading the house price deflation tables and regularly comes top of every worst place in Britain table going. So, what, I ask you, is the point of this article? I mean, really...

    At least it is clear evidence of how stupid things are. Maybe on HPC2030, they will pore over the article to explain when the next bubble might end. :blink:

  5. :blink: Keep it in the family

    Rebecca O’Connor got on the property ladder by buying with her sister in another city

    SIX months ago I responded to the words “property ladder” with a mixture of self-pity and nausea. I am single, 25 and live in London. Apart from the thought of losing my job, nothing could induce despair like the prospect of renting into eternity. I raged about the injustice of market forces, student loans, having parents who cannot afford to help, the lack of proper assistance for anyone who is not a teacher in Surrey and, critically, the lack of a rich boyfriend.

    A tenth of graduates are so down on the idea of buying that they have given up altogether, according to a report from Scottish Widows Bank. The average starting salary in London is £22,737, but the average first-time buyer property in the capital costs £150,252, requiring a standard deposit of £30,185. With house prices rising faster than starting salaries, that elusive first rung is only moving farther out of reach.

    The Government and mortgage lenders have recognised the problem, but the solutions they have offered so far have been piecemeal. A new government initiative launched this month, the Open Market HomeBuy scheme, run in conjunction with lenders, will benefit only a few buyers who meet the criteria. Lenders’ own deals often force borrowers to accept a compromise, either on the rate or on the profit from the sale. Many aspiring homeowners are falling between the cracks.

    After a forlorn investigation into my own options, I resigned myself, like thousands of other graduates in the capital, to lining the pockets of landlords for the rest of my days. Yet somehow I have managed to join the smug ranks of home ownership and it was not as difficult as I thought. Instead of trying to buy by myself in London, where I live and work, I bought with my 21-year-old sister, Cathy, in Nottingham. She too was priced off the ladder. Even standard £90,000 first-time-buyer properties in Nottingham are out of reach for a single person on a salary of £15,000. But Cathy and I are now the proud owners of a newly renovated two-bedroom maisonette, 15 minutes’ drive from the city centre, for the relatively modest sum of £106,000. A similar property in London would have set me back £300,000.

    Cathy, who works in marketing, now lives there with her boyfriend Toby, a first-year student, and Toby’s friend Theo, also a student. She and I split the mortgage repayments of £664 each a month. Although I am still living in London and paying rent of £600 a month, I am not out of pocket because Theo’s rent covers my half of the mortgage. According to the terms of the Government’s Rent a Room scheme, we are allowed to make £4,250 a year in rental income without paying tax.

    This arrangement, which can best be described as a kind of hybrid joint first-time buyer, buy-to-let solution, is not a traditional way on to the ladder because, unless a mortgage is taken out on a buy-to-let basis, lenders will not consider rental income when determining how much you can afford to borrow. Our loan was granted on the basis that I would be able to afford the repayments on top of my rent in London. Most lenders will also not offer loans for 100 per cent of the property’s value to two people if one of them lives elsewhere. According to them, the risk is that the borrower not in residence will be more likely to default on repayments. But Cathy is my sister; without being disowned by my entire family, I could not simply abandon her — I know my filial duties. Cathy calls me The Royal Bank of Becky; there as a source of funding and occasionally called upon to perform cost calculations or offer a second opinion on furniture choices.

    Nick Gardner, of the broker Chase De Vere Mortgage Management, says: “Lenders are worried about affordability. This arrangement looks risky because of the rent on top of the mortgage. It is also awkward from a regulatory point of view. It is not a buy-to-let because someone is living there, but it is not a principal residence either because one borrower is not living there.”

    In our case, only three lenders would consider our application: Portman Building Society, Royal Bank of Scotland and Scottish Widows. Portman would not offer us a loan because the property has to be the main residence of the higher-income earner, and Scottish Widows said no because my sister is not a graduate. The deal we were eventually offered by RBS was a two-year tracker pegged at 0.89 percentage points above base, giving a current rate of 5.64 per cent. The rate is high, but the best we could get without a deposit.

    Lenders add a premium for loans on 100 per cent of the property, so a deposit can make a big difference to the rate. For instance, Portman offers a rate of 4.75 cent on loans up to 95 per cent. This rises to 5.74 cent on a 100 per cent loan. With the deposit, a £100,000 mortgage would give repayments of £576.54 a month; without, this rises to £635.87. However, a deposit need not be greater than 5 per cent to obtain best-buy rates. Gardner says: “Generally, best-buy rates for two and five-year fixed deals are available with LTVs (loans to value) up to 95 per cent of the value.”

    The solution Cathy and I pursued, of buying with siblings or friends, is a growing trend. Many lenders, including HSBC and Britannia Building Society, are promoting group loans for up to four people as the solution to first-time buyer angst. Melanie Bien, of Savills Private Finance, says: “More lenders are recognising the need to offer group loans; they enable buyers to get a bigger mortgage and a larger deposit. Monthly mortgage payments should also be more manageable and you can share the cost of repairs and maintenance.”

    But there are downsides. Bien says: “Friends fall out, so perhaps you should rent together first. Your circumstances or those of your friends might change: you might want to marry and will need to sell your share.” Buyers should get a legal contract drawn up stating how much each has contributed towards the deposit and what will happen if you want to sell up.

    I would prefer to stick with sharing bottles than mortgages with my friends. But even buying with siblings is not foolproof: there is still a possibility that we will fall out or want to leave. If Theo moves out, we will lose rental income and I may have to forgo the odd holiday.

    Given the potential advantages, it all seems worth it. If we keep the flat, we stand to benefit from predicted house price growth in Nottingham of 5 per cent over the next five years. The city’s reputation as the crime capital of England and Wales is worrying, but Mapperley, our area, is so far unscathed by the gang warfare and the police are being more active.

    As well as giving us an investment and extricating Cathy from her high-rise, damp-ridden former address, buying together has given us a chance to bond. We used to speak once a month; now it is twice a week, with e-mails in between. I have seen her more times in the past few months than in the previous seven years. It has also placated our mother, who describes our purchase as “a weight off her long-suffering mind”.

    FACTFILE

    Share-to-buy — deals that let up to four first-time buyers (FTBs) club together to get a larger loan on a more costly home; can also mean lower monthly repayments.

    Shared equity schemes — offer FTBs the chance to obtain a bigger loan in return for a share of the profit when they resell their home. Mainly government-run, such as the Open Market HomeBuy scheme, but also available from lenders.

    Affordability calculations — lenders assess how much to offer based on how much the buyer can afford to repay each month, instead of multiplying his or her income. Can help FTBs with low monthly outgoings.

  6. Being an avid reader of the weekly property rag here in Plymouth,the latest EA ploy to panic any "fence sitters"into buying NOW has been apparent over the last few weeks.A different EA every couple of weeks or so,will show that EVERY property in a particular branch has been sold.However,what they are doing,is just dredging up sales from way back,giving the impression they are "sold out" in that area.I would be extremely irritated if i had just put my property with them to be sold,and they wasted valuable circulation to mount this stunt.

    If everything is sold, surely everyone ahould be fired and the business closed down. :lol:

  7. Firstly, I 'm not sure where this confidince in the IR cycle is coming from. I've seen the graphs that show IRs peaking mid next year and I've seen the BOE inflation predictions.

    However, I've also seen the IR predictions for Japan, which if what I have read about the carry trade is correct would have an effect on the cost of borrowing. These seem set to rise for a good while yet.

    The other point is IRs are not the only trigger for crash. The slowdown in the US right now could have a massive effect on both sentiment and the real economy.

    Another sentiment driver could be a crash in Ireland. Close to home and teetering on the edge. Another couple of rises from the ECB will be enough to cause a crash in Ireland.

    IR raises will have an effect, and if high enough cause a crash. But, at the moment they are only one of many straws that could break this camel's back

    So you think the last 0.25% has not yet had any effect (but will)?

  8. Never uderestimate the power of the average joe to bury his head in the sand. The government could feed most people 5hit with sugar on and make them believe it was chocolate.

    There's absolutely no point in trying to make an IR prediction, the economy is now global and the BOE are not acting in isolation of (and are therefore at the mercy of) events in every other economy around the world. IMHO China is absolutely key, if (when) the Chinese government stops pegging the Yuan the effects will be felt worldwide and will be dramatic. We're just a feather in the wind.

    Sadly I agree people will swallow anything. As for the effect of other MPC equivalents, we will see rises, as I said but probably not enough I suspect...

  9. Yet.

    Six months ago, the consensus was that the next move would be a cut.

    We're still not certain what will happen next month - never mind next year. The futures markets are assuming that rates will come back next year because that amounts to a "default" position.

    I suspect that the inflation toothpaste is only just beginning to leak out of the tube. Can the IR cap be tightened back on before the money growth hand squeezes the tube harder? :blink:

    (apologies for rubbish metaphor)

    Unfortunately inflation figured can be manipulated massively as we have seen (even as we see prices rising on all sorts of thigs.)

  10. I agree too little too late, it needs a lot more than 1% rise for next year,

    the crash will happen but not until 2008 at the earliest, and that might be towards the end of the year.

    and no i am not turning bull, just trying to be honest as i see it.

    Actually you still sound quite bearish to me, assuming that someone buying now will still own the property in a couple of years.

  11. If we see 0.25% additional this year, then maybe another 0.25% in March 2007, another 0.25% say June 2007 (I am guessing! :) but cannot see much more than this) is this sufficient to reverse house prices, even if the MPC can be assumed to want a slowdown rather than a crash? I know this is a big percentage rise and there is a lot of debt, increased taxes, expenses et al but my gut feeling is it is too little too late and we are in for a medium term asset boom yet...I wish it was different and would love to be convinced otherwise.

    S.

  12. RICS are making the identical statments that were coming from David Lereah, the EA uber-Bull in the US. In 2005 the US market was rising rapidly with 10% plus gains in many markets. Dave said its different this time and that high employment and low IR were underpinning the market. However, he suggested that 2006 might see a slight cooling as affordability would provide a soft landing to the market. One year on and the US bubble is crashing.

    What killed the US bubble? Wages did not keep up and IR went up ever so slightly. Fixed 30 year loans went from a low of 5.25% to today's 6.4%(Mortgage rates in the US are not tied that closely to the Fed rate which is what gave birth to Al Greenspan's "conundrum" where IR for loans moved in the opposite direction of the Fed rate for several years--Asian credit was the culprit). It did not take much by way of IR to collapse the bubble because people had borrowed so much. The economy has been fine, jobs plentiful and yet the HPC is underway.

    We are NO different--just 6 months or so behind.

    To be fair, US interest rates went up a lot, albeit from a a very low base, no?

    S.

  13. If you put the offer in in May, then probably not. Don't forget there's another bumper round of City bonuses coming next year, which will push London prices up further.

    I would reckon then that by next year you'll have a nice buffer of at least 10% to protect yourself with if prices then start to come down.

    You are very optimistic. How many people do you think get significant bonuses (say £100,000+) and how does this figure in terms of the overall number of houses available in London?

    S.

  14. http://new.eveningnews24.co.uk/content/New...3A24%3A43%3A550

    Although house prices in the county are climbing compared to some parts of the country, more properties are coming onto the market here and as the festive period is traditionally slow, buyers could benefit, according to a leading estate agent.
    Latest figures have shown that
    house prices across the country fell by 3.4pc last month
    to an average of £208,617 and the number of properties up for sale also dropped along with the number of those house hunting.
    But Chris Hall, a Norwich-based estate agent and former president of the National Association of Estate Agents (NAEA) said: “Norfolk is bucking the trend. My gut feeling is that September was a good month and that actually it was better than August.

    I would say we have also seen falls around my neck of the woods but it seems that the VIs have been ramping like wild boars with a firework up their a*se. :blink:

    Who is that t_osser in Norfolk? Presumably this overall spin is intended to avert another rate rise when most other indices are showing rises still?

    S.

  15. Yes, he's in the next cell over from mine... ;)

    So in fact he didn't buy a house whilst in prison - somebody else did, using his money.

    It also has all the hallmarks of quality Daily Mail investigative journalism. Their source for the story? The Evening Standard.

    I am not sure that someone in his family buying a house with his money on his behalf when he is claiming legal aid, family living in a council house and his family collecting benefits actually makes the story complete piffle. Agreed it was not directly in his name but presumably that was to throw off the fearless legal aid investigators... :rolleyes: Presumably the judge making the restraining order thought there was something fishy about it. I am not sure it is particulalrly important in the scheme of things but I was amused by it anyway.

    S.

  16. I went for an afternoon walk after lunch today, and on the way stopped in at a local pub for a pint.

    Casually reading through the Mail on Sunday, there's an article about a couple who've recently bought a place in Florida.

    It went something like this:

    We've bought a place in Florida as an investment, and hoped the property would increase in value. However we've recently heard the US property market is in freefall. What should we do?

    Answer: Well you probably won't be able to seel the place, because the only ones buying are bargain hunters. The US Dollar has lost a lot of it's value recently, so best hope you can get rental income in Pounds or Sterling.

    Only a few more months and average joe will knoe the US is in trouble.

    Anyways, nice to see that a healthy dose of reality is starting to kick in...

    Presumably finance workers get bonuses in California and elsewhere but it is not holding up the market? The Times has deceived me... :o

  17. http://www.guardian.co.uk/g2/story/0,,1886950,00.html

    Coming soon - (another) winter of discontent?

    Tim Dowling

    Wednesday October 4, 2006

    The Guardian

    Summer's lease has run out. The nights are drawing in, and there's a distinct hint of woe in the air. Could the coming months produce more than the usual annual bout of gloom? Prices are rising, and so are interest rates. Mortgage defaults are up. A potential gas shortage is been predicted for the coldest months of the coming year. Things certainly look bleak, but are they that bleak?
    ..../
    Many of the elements of the original winter of discontent seem to be falling into place again.
    TUC..../
    Already
    770,000
    people have defaulted on their mortgages
    in the past year. And pawnbrokers are making a comeback, with pawning up 30% annually...../
    Oil prices have trebled in the past three years. The cost of electricity has risen by 23% so far this year, and gas has gone up 35%..../
    Food prices, which have been falling for years, are rising. The price of bread, milk and fruit has increased by more than 10% since May. Poor harvests caused by the July heatwave bear part of the blame, but experts are saying the era of ridiculously cheap food is behind us..../
    If you're an incurable optimist, there are still a few straws to clutch at.

    The economy should start to take on the characteristic shape of a Bartlett Pear as winter sets in. :o *

    ________________

    * :D

    If you are looking for an incurable optimist, Dogbox is your man. His optimism is terminal apparently. :)

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