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70PC

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  1. That is a good summary of both the problem and the solution. Historically inflation control was down to hard preemptive strikes. We seem to have reached an inflection point where small changes either way or even standing still could have significant consequences. At things are a crisis looks inevitable for one party or the other. Will it be mortgage holders when their fixed rates expire, lenders, pension funds, people with savings or others. What do you think?
  2. Who actually runs the EU? It doesn't seem to be France despite their undoubted influence. The Brussels bureaucrats assure us that they just follow orders. The European MP's don't seem to do much beyond getting indignant in debates. Greece certainly doesn't run the EU. So who does the EU belong to and who pulls the strings?
  3. The increase in borrowing multiples is not about whether 1 or 2 parties are contributing to mortgage payments. At the most that would double the number. The decline in mortgage interest rates has made the difference. Lenders measure risk against affordability.
  4. Fair point but the ability of banks to raise money to fund these deals is contingent on building a reputation for being a safe handler of other people's money. If not, the house of cards falls down as it did before.
  5. If you lent £10 m of your own money to house buyers at 2% interest for 5 years, what deposit from the borrowers would you look for? The only upside to mortgage lending is that the borrowers keep up the repayments. If the borrower defaults, you might recover your money from the sale price of the property. You might also pursue the borrower for the difference but county court judgement's will take account of the debtors financial circumstances. That could be £100 a month on a £100 k debt. It does not take many bad defaulters to wipe out a 2% return. The last financial crash was largely down to lending on subprime mortgages when people were borrowing up to 125% of property value. The lenders were rescued by governments. The financial markets might tell us it is different this time because they have set tougher limits on deposits. If house prices cascade down, those deposit fractions will shrink much faster than the underlying mortgage debt. The next crash will happen when unprecedentedly low interest rates are corrected. Money lent at current rates is intrinsically subprime for one party or the other. It is in the nature of markets to go up and down. In the case of UK house prices, the last significant correction was over 30 years ago when interest rates reached over 14%. Bank of England interest rates are currently 0.1%.
  6. That is definitely the question. With a 25 year mortgage fixed at 2%, the sky's the limit. Even if house prices fall, this is a cheap way of putting a roof over your head.
  7. Affordability goes to infinity at zero interest rates. Mortgage offers are not zero yet but surprisingly close. Buying a house in Winchester for £600k makes complete sense at zero interest, even if you only earn £1 an hour.
  8. Affordability goes to infinity at zero interest rates. Mortgage offers are not zero yet but surprisingly close. Buying a house in Winchester for £600k makes complete sense at zero interest, even if you only earn £1 an hour.
  9. According to Rightmove, the average house price in Winchester is £617,771. Who buys the average house there and how do they pay back £27k a year over 25 years plus mortgage interest? Is wage inflation the answer? Apparently it is not that simple now. At 0% mortgage interest, house prices can go to infinity. We are not far from those rates now. People have short memories.
  10. Dear 70PC communist. You have clearly not heard of the phrase 'land bank'. If we start putting homes on the land we own, my 200 foot yacht in the Bahamas will end up in the hands of some anorak writing video games within 5 years.
  11. If you sold the houses for £150k, you would still make a big margin and more people would have houses.
  12. Dear 70PC! Are you some sort of communist? I will have you know that the £250k house you refer to costs my building company £35k in land costs and £17k to build. Do you think I am a charity? Are you trying to put my employees out of work?
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