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Inflation Question: Buy Now?

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If I believe some form of hyper inflation is on the way (10-15%), say in the mid term (3-5 yrs tops), isn't it better to buy a place now on a 10 year fixed rate, at a mortgage I can comfortably afford, and allow inflation to erode the debt?

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THat aint hyper inflation m8

That aint even high inflation

Google hyperinflation

If that happens on a global scale, where you live will be the least of your worries!

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Inflation/hyperinflation will just make unaffordable things more unaffordable, like jobs, pensions and property. The public won;t know what hit them, they'll wake up one day and realise though as it will be a struggle just to pay the taxes and survive.

Edited by OnlyMe

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Inflation/hyperinflation will just make unaffordable things more unaffordable, like jobs, pensions and property. The public won;t know what hit them, they'll wake up one day and realise though as it will be a struggle just to pay the taxes and survive.

Yes, I know inflation will be terrible for the broader population. Inflation was terrible in the 1970's but it stil paid my parents' mortgage off.

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Yes, I know inflation will be terrible for the broader population. Inflation was terrible in the 1970's but it stil paid my parents' mortgage off.

Only because at the time the economy was strong/competitive enough and lacking other competition that it worked through the period and there were enough opportunities to keep the cycle going. Demographics helped a lot too.

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If I believe some form of hyper inflation is on the way (10-15%), say in the mid term (3-5 yrs tops), isn't it better to buy a place now on a 10 year fixed rate, at a mortgage I can comfortably afford, and allow inflation to erode the debt?

Great idea if everyone else is on a ten year tracker as well.

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so how many inflationists are prepared to do this?

I'm in the process of buying, simply for the fact that I fear that my savings will be stolen from me through inflation.

I don't want to. I know prices will continue to fall for a while, perhaps another 2 years, then a further 5 years of slow/no growth, but nobody has come up with a better alternative.

Any before you ask, I already have gold, Euros, dollars, and come to mention it, guns, ammo and beans too.

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Yes, I know inflation will be terrible for the broader population. Inflation was terrible in the 1970's but it stil paid my parents' mortgage off.

Ask your parents what their income multiple was ;)

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"Owning a home for your family would be beneficial and the mortgage would be wiped out by the inflation, if you can keep up the payments."

In which case, if you don't see property as an investment, just as somewhere to live, then the answer to the OP would be yes - based on what this part of your post.

btw I should point out that this isn't my view - I'm in the wait and see camp for the time being.

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Arent you reading the other threads?

Property is not a great investment in hyperinflation, and BTL is a poor investment...

From a GEI thread / copied onto another thread here.

Great find, Enrieb, on the "Goods during hyperinflation" thread

So what will happen to all those UK BTL speculators if the UK heads into hyperinflation?

You're missing the point here Bubbs. It's the debt that makes buying with a mortgage a good investment, not the value of the property. Inflation wipes out value of the debt. Of course you could use the same principle to buy something better than property with debt, such as gold or sugar or antiques or anything, but property is the only kind of major asset that most people can buy on leverage.

The answer to the OP is a resounding yes. Inflationists and hyperinflationists should be buying property before the inflation phase begins, which mean now.

How many people on this forum will have the balls to do so? Probably none. It's counter-intuitive and contrarian if you believe the crash has a lot further to go.

Edited by copernicus

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If I believe some form of hyper inflation is on the way (10-15%), say in the mid term (3-5 yrs tops), isn't it better to buy a place now on a 10 year fixed rate, at a mortgage I can comfortably afford, and allow inflation to erode the debt?

Iceland has inflation of ~20% and house prices are still dropping in real and nominal terms there. TBH in high inflation times like the 70s/80s house prices were way more affordable then. Wages or house prices will have to adjust, i wouldnt get too bothered about inflation unless youve got a large cash pot.

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Premise was:

If I believe some form of hyper inflation is on the way (10-15%), say in the mid term (3-5 yrs tops), isn't it better to buy a place now on a 10 year fixed rate, at a mortgage I can comfortably afford, and allow inflation to erode the debt?

Very good point.

BTW, 10-20% isnt really hyperinflation

What is happening in Iceland is Stag-Flation: stagnation and inflation,

as the currency falls bring higher inflation, and higher interest rates - a nasty combination !

The UK is headed to a similar place IMHO, and will get there before the US.

Once this temporary property dead cat bounce is done, the Stagflationary "fun" will really start!

Here's more: UK Wealth Destruction, is it one step from Financial Collapse?

If we end up with 20% inflation, I cannot believe prices will continue to fall in nominal terms. My thinking is that the debt of the UK consumer has to either be written off by the banks (wont happen) or paid back by consumers (wont happen); so the only option left is to inflate and further debase the currency (this has been happening since 1926).

I cannot believe that house prices will fall in nominal terms if inflation hits 20%. If I have certainty of income stream, a fixed rate liability, inflation will pay back my mortgage surely?

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If we end up with 20% inflation, I cannot believe prices will continue to fall in nominal terms. My thinking is that the debt of the UK consumer has to either be written off by the banks (wont happen) or paid back by consumers (wont happen); so the only option left is to inflate and further debase the currency (this has been happening since 1926).

I cannot believe that house prices will fall in nominal terms if inflation hits 20%. If I have certainty of income stream, a fixed rate liability, inflation will pay back my mortgage surely?

Who is going to pay your inflated wages?

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Surely if you believe real prices are falling becasue of HPC but nominal ones are not because of inflation then it would be logical to buy something else that is more inflation proof but not losing real value. Whatever that something might be.

Edited by tpbeta

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I cannot believe that house prices will fall in nominal terms if inflation hits 20%.

Go and work out the repayments on a 25 year term £160k repayment mortgage at 5%, 10%, 15% and 20% interest rates. Now compare them to the takehome of someone on £40k (about £2,500). Quite simply, at 10% both BTL'ers and FTB'ers would completely cease to exist at that rate. No new money in. End of. At 20% it's total Armageddon. Yeah, I know I've not added in the pay rises, but given that they lag, they're not guaranteed, and all other living costs are rising anyway, they're basically pissing in the wind compared to the increase in repayments in the short term.

Why is this different to the 70s? Income multiples.

Do the same calculations, but change that 4x income £160k repayment mortgage for a £120k repayment mortgage and the difference is quite staggering.

In short, inflation is a great way of destroying debt.... but only if the amount of debt isn't far too high in the first place.

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Hi everyone, been lurking here for nigh on a year now, and thought id do my first post!

I am of the same opinion, inflation is on the way, and regardless of the level it is just about the right time to get a 10 year fix to protect myself from it all.

Although Im currently teaching courses for the unemployed so I am and will be incredibly busy for the foreseeable.

I just dont want to see my savings eroded by inflation whereas id sooner see a housing debt eroded by it instead.

Is it time to buy? more than likely..but I am certain falls are goign to continue. However will these falls balance versus the interest rates available now?

Who knows...im just expecting armageddon. :blink:

Stu.

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If I believe some form of hyper inflation is on the way (10-15%), say in the mid term (3-5 yrs tops), isn't it better to buy a place now on a 10 year fixed rate, at a mortgage I can comfortably afford, and allow inflation to erode the debt?

Immediate question. Who's gonna give you a 10 year fix?

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Immediate question. Who's gonna give you a 10 year fix?

Manchester Building society are doing them at 5.47% with a 70% LTV. Although thats still a fairly massive whack of cash needed!

Stu

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Unemployment rocketing, underemployment rocketing, factories sitting idle, commodities in another bubble. I just don't believe the inflation story.

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