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vzzzbx

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About vzzzbx

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  1. I'm wondering if this is going to be the straw that broke the camel's back. Once investors start demanding a normal, healthy above-inflation return on their investment in US government debt, which is supposed to be the safest possible investment class, everything else has to go up too. Why would you loan anyone else cash if it's more risky than loaning it to the US government and is also paying a lower rate? It causes a cascade of other things to happen. Rates go up across the board. Taking it further, this puts stress on other areas of the system which could be enough to make them go pop
  2. How come interest-only mortgages are only banned for people buying the house to live in? If it's such a risk to loan on an interest-only basis, surely that should also apply to interest-only buy-to-let mortgages? At least I assume it only applies to owner-occupiers. Somehow the rules always seem to be different for buy-to-let.
  3. And yet the mystery still remains of where the money is coming from to pay for all these price rises. Last time I looked, people's salaries weren't getting any bigger. Looks like it's more and more magic money. Sooner or later, it's all got to come crashing down. The question remains is whether any of us will still be around to benefit from it.
  4. Not sure I agree that everything on the high street is doomed. Sure it's easier and cheaper to get a lot of things online - try getting bits for your desktop computer from the high street and you'll see what I mean. However some products simply don't translate well into the online world. Take shoes for instance - they might look good but you really do need to try them on before buying. Even if they have your size in stock, they still might be uncomfortable when you're wearing them. You also still need a post office to be able to post back stuff you bought online that you don't want or isn
  5. FINALLY! The immediate question that springs to my mind is: why wasn't this done a lot sooner? Also the story doesn't seem to mention any hard definitions of "applicants must satisfy lenders that they can repay a mortgage", so maybe Reckless Lending Bank Plc could still set up really crappy risk policies and lend to anyone able to fog up a mirror. But at least it does say something about Eric's favourite LIAR LOANS. About time they were thoroughly banned and actually should be made illegal with both the borrower and lender facing jail time, in my opinion.
  6. I've been making something similar too, except mine is designed for predicting your future costs based on assumptions you enter. One thing I'd say that's hard to compensate for is inflation. If you take a figure of 5% for inflation, then £500 in rent today costs more than £500 in 6 months time. At least in theory. Actually it depends on when/if you get a pay rise. If that's in 3 months time, then the last 3 months rent of £500 are easier to handle than before the pay rise. I notice your spreadsheet doesn't factor inflation into the costs of renting, but does take it into account on the b
  7. Ahh but what happens when the banks have rebuilt their balance sheets enough so that they can afford to pull the plug on people in arrears in much greater numbers? I don't for a moment assume the current amounts of forbearance is the banks being helpful to borrowers out of the goodness of their hearts. I much prefer the explaination that there's a solid financial reason they're choosing this course of action. Maybe the banks are just biding their time. After all, I assume it must cost quite a bit in up-front fees for a bank to be able to repossess a house, market it, find a buyer and get a
  8. Then I would say that this shows that even if one tries to stack the deck in favour of their preferrred answer (that the "new paradigm" of higher house prices is sustainable), reality still comes in to mess things up and show you up for an idiot. As to further house price rises, it looks like there's not much else left to move over from the "interest" side of the total mortgage cost to the "original loan" side. So short of some more crazy lending, higher incomes for everyone or more people with incomes per household buying together, those numbers don't look like they've got much ability to g
  9. It's true there's some fairly obvious flaws in the assumptions - that the interest rate would remain the same for the entire 25 year term being the biggest. It's an oversimplification I used to help pose the original question. The point of the post was intended to show some sort of crazy logic to the idea of higher house prices being sustainable. (Not that I think they are, I should add). I suppose if you assumed that interest rates can't go up significantly for the next 10-25 years and shut your eyes, run quickly over the shaky assumptions with your fingers in your ears going "LA LA LA",
  10. Here's an interesting conundrum to pose: Late 1990's style scenario: Income: 20k/year House price: 65k Price/income ratio: 3.25 Deposit: 6.5k Mortgage interest rate: 10% Monthly mortgage payment: £531 Total paid over entire 25-year mortgage term inc. deposit: £165,976 Theoretical current day(ish) scenario (i.e. not entirely the same as today's reality, more of a thought experiment): Income: 25k/year House price: 120k Price/income ratio: 4.8 Deposit: 12k Mortgage interest rate: 3.2% Monthly mortgage payment: £523 Total paid over entire 25-year mortgage term inc. depost: £169,035
  11. Indeed you could save or overpay while paying a mortgage, but that wasn't the point I was trying to make. It was simply to show the fallacy of the statement that "renting is always dead money", when clearly it isn't. However, in the illustration probably I should have put the following disclaimer: "The following situation assumes that you're working your ar$e off giving up all sorts of things to get the deposit you need for the house. It further assumes that this is unsustainable in the long term and that once you get the mortgage, you'll not be overpaying on it." However, for the doubter
  12. Not sure I'd go so far as to say it's manipulating the figures. It's more like saying "given this set of parameters, this is the result". Sure - it's certainly possible to overpay and it does save cash. My original illustration assumed a (hopefully more realistic) situation where people save like crazy for a few years for a deposit, then ease back afterwards because the cash is needed for other things such as insurance, repairs, holidays, kids, pension savings, replacing rust bucket cars and the like. But yes, if you're hell-bent on paying off the mortgage as fast as possible then the calc
  13. No problem, all constructive criticism welcomed! Yes, you probably could move to a better monthly rate after a while. But then so could scenario 2. What I was trying to do was to give a relatively straightforward argument that lots of people can understand. Perhaps that's not possible with mortgages, but it's worth a try.
  14. Admittedly not many people. Maybe I should make a spreadsheet so people can put their own numbers in to see how much they'd save. In any case, I think this is a strong case for compulsary teaching of financial literacy in schools. There's far too many people don't do calculations like this before taking the plunge.
  15. We always hear people telling you that "renting is dead money". All that is, except people on this site. So for your edification (and a convenient page to point the doubters to), I present a fully worked example of when renting can save you money against a mortgage. Enjoy! The situation: You want to buy a house costing £280k and prices aren't rising You have a deposit saved up of £37k You're currently renting a place for £900/month You can save £2500/month while renting Option 1: buy now You put down a deposit of £28k (10%), holding back £9k for fees, repairs, emergencies etc. You g
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