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Banker Friend Ftb Put Offer In On £1m Home

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Banker, late twenties, a trader, just put in an offer on a £1m asking price home. Been on market only a few days, offered 8% below asking.

With a child on the way, he needs a home. He reckons UK interest rates will be in doube figures within two years; but reckons that inflation will be, too. Wants a store of value for his cash (about half mortgage), and thinks that property prices will not fall more than 20% tops - on account of inflation.

Time will tell who is right.

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Something makes me think that the average persons wage will not increase by 20% in 2 years

Edited by sbn

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What area?

I think you are seeing incredible value in the ~£1mio area, where a lot of houses have been reduced from £1.4-£1.5mio asking price. I saw a 2,500 sq ft property in SE1 with a south facing garden for just £940k, which would have peaked out at around the £1.4mio mark.

I reckon your man will look pretty sharp in 2 years time. That said, I'm sure the bears will all tell you how idiotic he is.

I am sure (since he's a trader) that he'll be getting a long term fixed rate mortgage if he thinks interest rates are about to spiral - the longer the better - if he can get 10yrs at sub-5% that's a great deal.

[e] Average wages might not but if he thinks his will, that's probably enough, no?

Edited by Charterhouse

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Banker, late twenties, a trader, just put in an offer on a £1m asking price home. Been on market only a few days, offered 8% below asking.

With a child on the way, he needs a home. He reckons UK interest rates will be in doube figures within two years; but reckons that inflation will be, too. Wants a store of value for his cash (about half mortgage), and thinks that property prices will not fall more than 20% tops - on account of inflation.

Time will tell who is right.

well, the inflation is right now low and will not jump up over night, so I do not see why to hurry ...

1m house -> 20% down -> 40% of his equity gone -> simply clever ...

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What area?

I think you are seeing incredible value in the ~£1mio area, where a lot of houses have been reduced from £1.4-£1.5mio asking price. I saw a 2,500 sq ft property in SE1 with a south facing garden for just £940k, which would have peaked out at around the £1.4mio mark.

I reckon your man will look pretty sharp in 2 years time. That said, I'm sure the bears will all tell you how idiotic he is.

I am sure (since he's a trader) that he'll be getting a long term fixed rate mortgage if he thinks interest rates are about to spiral - the longer the better - if he can get 10yrs at sub-5% that's a great deal.

[e] Average wages might not but if he thinks his will, that's probably enough, no?

for 1m, id be EXPECTING incredibla value.

indeed for £100K id be Expecting incredible value....thats 6 years of work on nothing but buying a place...for the average man.

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Banker, late twenties, a trader, just put in an offer on a £1m asking price home. Been on market only a few days, offered 8% below asking.

With a child on the way, he needs a home. He reckons UK interest rates will be in doube figures within two years; but reckons that inflation will be, too. Wants a store of value for his cash (about half mortgage), and thinks that property prices will not fall more than 20% tops - on account of inflation.

Time will tell who is right.

I have thought about that argument myself, but after delving through inflation stats I reckon mild deflation is on the cards short to medium term ;)

I hold some commodities and foreign currency bonds as an insurance policy though :unsure:

I don't think the banking industry is that stable yet either, lots of regulation coming :(

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Banker, late twenties, a trader, just put in an offer on a £1m asking price home. Been on market only a few days, offered 8% below asking.

With a child on the way, he needs a home. He reckons UK interest rates will be in doube figures within two years; but reckons that inflation will be, too. Wants a store of value for his cash (about half mortgage), and thinks that property prices will not fall more than 20% tops - on account of inflation.

Time will tell who is right.

"Wants a store of value for his cash (about half mortgage),"

So he is getting around 4-5 times (base) income multiple?

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for 1m, id be EXPECTING incredibla value.

indeed for £100K id be Expecting incredible value....thats 6 years of work on nothing but buying a place...for the average man.

Did you deliberately put this through some sort of gibberish spell-checker? No capital letters except an "E" randomly inserted, no punctuation, ellipses scattered through your "sentence". Make an effort when you post if you want anyone to pay attention.

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What area?

I think you are seeing incredible value in the ~£1mio area, where a lot of houses have been reduced from £1.4-£1.5mio asking price. I saw a 2,500 sq ft property in SE1 with a south facing garden for just £940k, which would have peaked out at around the £1.4mio mark.

I reckon your man will look pretty sharp in 2 years time. That said, I'm sure the bears will all tell you how idiotic he is.

I am sure (since he's a trader) that he'll be getting a long term fixed rate mortgage if he thinks interest rates are about to spiral - the longer the better - if he can get 10yrs at sub-5% that's a great deal.

[e] Average wages might not but if he thinks his will, that's probably enough, no?

Yes, if you can get a house that was £1.5m at peak for £1m then yes probably a reasonable bet - I saw once in a prime London suburb go for £1m when the identical neighbours house (albiet in better condition) went for £1.8m at peak.

However if its a house that was worth £1.2m in at peak, then he's probably paying too much, as prime London went up by 40% in the year running up to the peak, and its hard to see that this gain is sustainable.

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Did you deliberately put this through some sort of gibberish spell-checker? No capital letters except an "E" randomly inserted, no punctuation, ellipses scattered through your "sentence". Make an effort when you post if you want anyone to pay attention.

gibberish is gibberish, spell checked or not.

how about answering the point

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Did you deliberately put this through some sort of gibberish spell-checker? No capital letters except an "E" randomly inserted, no punctuation, ellipses scattered through your "sentence". Make an effort when you post if you want anyone to pay attention.

Keep your hair on Dad!!!!

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Did you deliberately put this through some sort of gibberish spell-checker? No capital letters except an "E" randomly inserted, no punctuation, ellipses scattered through your "sentence". Make an effort when you post if you want anyone to pay attention.

Chill <_<

Bloo makes a good point

Paying £1m for a house only makes sense with a lot of high earners about ;)

Most of that in London is generated by finance and allied industries :unsure:

Bankers are making hay out of wide spreads at the moment, but loan losses and more regulation are just around the corner ;)

I dont see apocalypse, but I do see a smaller finance industry as a strong possibility :blink:

(Ps sorry about my spelling)

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gibberish is gibberish, spell checked or not.

how about answering the point

OK. His annual income is probably 500k+.

So this is 2 years.

So he's probably not even that bothered what you think.

[e] That's overly pointed, sorry. My point is that it's not 25 years of salary or anything stupid like that. Hell the average London wage is about £45,000 and that includes a lot of Aussie bartenders and god knows what else. As a trader there's no way he'll be on less than about £200k a year. So this is 5x annual salary at absolute maximum.

Edited by Charterhouse

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Banker, late twenties, a trader, just put in an offer on a £1m asking price home. Been on market only a few days, offered 8% below asking.

With a child on the way, he needs a home. He reckons UK interest rates will be in doube figures within two years; but reckons that inflation will be, too. Wants a store of value for his cash (about half mortgage), and thinks that property prices will not fall more than 20% tops - on account of inflation.

Time will tell who is right.

He should have gone mortgage free on a £500K house then?!

Maybe settled down for a simple life in the country, he could get a less pressured job and his partner could stay at home full time to look after their new arrival.

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What area?

I think you are seeing incredible value in the ~£1mio area, where a lot of houses have been reduced from £1.4-£1.5mio asking price. I saw a 2,500 sq ft property in SE1 with a south facing garden for just £940k, which would have peaked out at around the £1.4mio mark.

I reckon your man will look pretty sharp in 2 years time. That said, I'm sure the bears will all tell you how idiotic he is.

I am sure (since he's a trader) that he'll be getting a long term fixed rate mortgage if he thinks interest rates are about to spiral - the longer the better - if he can get 10yrs at sub-5% that's a great deal.

[e] Average wages might not but if he thinks his will, that's probably enough, no?

Lets just call this current phase poetic justice.

I have a interest rate derivative trading friend who is buying up grand pianos as a hedge against inflation :lol: . I am loving this phase of the crash. :rolleyes:

Edited by Confounded

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OK. His annual income is probably 500k+.

So this is 2 years.

So he's probably not even that bothered what you think.

you said he sees incredible value in a £1m pound property.

I said for an average wage earner, even a £100K property needs to be incredible value.

a reasonably skilled man could build a £100K property in how many years I wonder. 6 years....full time? no way

to do it with finance thats exactly what it takes. 6 years...FULL TIME, and nothing else for food.

So for 6 man years of work, I would be expecting incredible value. £1m must be absolutely exceptional.

Edited by Bloo Loo

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OK. His annual income is probably 500k+.

So this is 2 years.

So he's probably not even that bothered what you think.

[e] That's overly pointed, sorry. My point is that it's not 25 years of salary or anything stupid like that. Hell the average London wage is about £45,000 and that includes a lot of Aussie bartenders and god knows what else. As a trader there's no way he'll be on less than about £200k a year. So this is 5x annual salary at absolute maximum.

My only point would be this

It all works if he manages to stay a trader :unsure:

If he has to take up a less well paying profession or becomes unemployed he is f1cked ;)

I would prefer a more modest house mortgage free - then all I might have to worry about is how much money I could have made if I had betted bigger

Personally I never lost any sleep over that in the past ;)

Edited by Neverland

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Lets just call this current phase poetic justice.

I have a interest rate derivative trading friend who is buying up grand pianos as a hedge against inflation :lol: . I am loving this phase of the crash. :rolleyes:

Your IRD trading friend hasn't heard about the risks of trying to catch a falling piano then .....

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OK. His annual income is probably 500k+.

So this is 2 years.

So he's probably not even that bothered what you think.

[e] That's overly pointed, sorry. My point is that it's not 25 years of salary or anything stupid like that. Hell the average London wage is about £45,000 and that includes a lot of Aussie bartenders and god knows what else. As a trader there's no way he'll be on less than about £200k a year. So this is 5x annual salary at absolute maximum.

I would treat base and bonus seperately, and I know of no traders on a 200k base.

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Guest Daddy Bear
Your IRD trading friend hasn't heard about the risks of trying to catch a falling piano then .....

I have an IRD friend buying up mules and donkeys as a hedge against inflation...... he's calling it a "dash to ASSets........."

OK - I'll get my coat.......

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Your IRD trading friend hasn't heard about the risks of trying to catch a falling piano then .....

I bet his name is NOT Morris Marina.

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I would treat base and bonus seperately, and I know of no traders on a 200k base.

Sadly the mortgage company won't, cue Eric..

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I have an IRD friend buying up mules and donkeys as a hedge against inflation...... he's calling it a "dash to ASSets........."

OK - I'll get my coat.......

:lol:

Daddy Bear you are with good company with your strategy it seems. Does this reasure you or worry you?

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