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Interesting Chat With A Colleague - Starting To Panic

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Just had an interesting chat with a colleague over the budget. They bought a house about 18 months ago, my advice at the time was if you do, don't overstretch yourself and ensure you have spare capacity in your budget for if interest rates go up/wages come down.

It would appear that they are on the limit and basically can service there current debts but then struggle for food/petrol money... I'm guessing they where relying on wage increases to at least give them some head room.

I get the impression they are just starting to panic, anyone else having similar conversations with work colleagues yet or is denial still in abundance about the current situation?

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I've had this same conversation with 2 close friends. They're both leveraged upto the nines and are genuinely starting to flap. What's about to come once seemed a long way off but it's now upon us.

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It's a sobering thought that what HPCers really really want will cause untold misery to some of our friends and relatives. They genuinely believed that they were doing the best for themselves and their families; it's not like a tulip mania where you have every reason to laugh at those who got sucked in.

But it has to be done :(

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It's a sobering thought that what HPCers really really want will cause untold misery to some of our friends and relatives. They genuinely believed that they were doing the best for themselves and their families; it's not like a tulip mania where you have every reason to laugh at those who got sucked in.

But it has to be done :(

Actually tulip mania was no different - just because it was tulips and not houses does not make a difference.

Imagine that you are a hard-working dutch person who has worked and toiled for years saving every penny you can... and then along come all these sods making more than you have earned in a lifetime by buying and selling tulip bulbs.

Then they start driving around the towns in the latest horse and carts, hanging around coffee houses drinking coffee all day and pulling the smart women... and whilst they are doing this the value of your savings is eroding, you ain't pulling any more, you walk everywhere and everything is going up in price.

So you either dive in and buy tulips or you stand in the town square daily waving a hand-bell and explaining the dangers of debt versus deficit.

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It's a sobering thought that what HPCers really really want will cause untold misery to some of our friends and relatives. They genuinely believed that they were doing the best for themselves and their families

Really ? I imagine many were simply sucked in by the greed as per usual. Of course - they will all tell us today that they were just thinking of their friends and relatives....

With many exceptions of course.

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Actually tulip mania was no different - just because it was tulips and not houses does not make a difference.

Imagine that you are a hard-working dutch person who has worked and toiled for years saving every penny you can... and then along come all these sods making more than you have earned in a lifetime by buying and selling tulip bulbs.

Then they start driving around the towns in the latest horse and carts, hanging around coffee houses drinking coffee all day and pulling the smart women... and whilst they are doing this the value of your savings is eroding, you ain't pulling any more, you walk everywhere and everything is going up in price.

So you either dive in and buy tulips or you stand in the town square daily waving a hand-bell and explaining the dangers of debt versus deficit.

Lot worse than that, if it is just tulip envy (even if fortunes were made) who gives a toss.

We have seen industries decimated, opportunities to perform constructive task outpriced, communities displaced and denial of access to housing and elevated cost of living, rents increased, quality of hosuing decrease/downsized/space removed the lot.

The loss of such driving forces is hardly something to shed a tear over.

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It would appear that they are on the limit and basically can service there current debts but then struggle for food/petrol money...

If they put themselves into that position then they deserve to face the consequences.

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I'll bet most people who put themselves in this position have Sky, pets, holidays, takeaways amongst 'other' things (and if MSE is anything to go by, the 'other' things are significant) that can be done away with before they start considering not making their mortgage payments.

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Actually tulip mania was no different - just because it was tulips and not houses does not make a difference.

Imagine that you are a hard-working dutch person who has worked and toiled for years saving every penny you can... and then along come all these sods making more than you have earned in a lifetime by buying and selling tulip bulbs.

Then they start driving around the towns in the latest horse and carts, hanging around coffee houses drinking coffee all day and pulling the smart women... and whilst they are doing this the value of your savings is eroding, you ain't pulling any more, you walk everywhere and everything is going up in price.

So you either dive in and buy tulips or you stand in the town square daily waving a hand-bell and explaining the dangers of debt versus deficit.

:D:D:D 11/10. No; 12/10. :P

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Long time reader, first time poster.

Talking to a married friend Monday - he and his wife both employed full time, now she is getting a weekend job at Tesco's to get some "spending money" - I get the feeling they are mortgaged up to the eyeballs, have MEWed several times (she has gone thru three cars in about four years!) and are now really starting to pause and think.

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It's a sobering thought that what HPCers really really want will cause untold misery to some of our friends and relatives. They genuinely believed that they were doing the best for themselves and their families; it's not like a tulip mania where you have every reason to laugh at those who got sucked in.

I don't think it's as simple as defending or attacking that analogy: there are some aspects in common, but not all of them.

I agree that the issue is morally difficult. Personally a house price crash would be the best thing that could happen to me: I have around £80k in savings waiting for prices to drop to something approaching a sane level, currently earning sod all interest. Yet at the same time I have a close friend and a cousin who bought in 2007 and '08 respectively, and who would be in serious trouble were that crash to happen (at the very least, would be trapped and unable to move while sinking mortgage payments into an NE asset). These people are not BTL-ers who were out to make money cynically out of their less fortunate fellow citizens, and nor were they motivated to buy by the prospect of cashing in on HPI.

Yet at the same time, there are a lot of people out there who were motivated by HPI-inspired greed, either as OOs or BTL-ers. And furthermore, the inability of the majority of average earners in their 20s and 30s to become homeowners is causing significant social and economic problems. Say what you like about Maggie, but I think her instinct about owner occupation was the right one: that if you own your home you're more likely to feel invested in the town/community in which you live, and that there is only such a thing as society if it's driven from the ground up, not from the top down. A reduction in house prices to around historical norms would cause some people pain in the short-term, but in the medium and long term would encourage investment back into productive sectors of the economy, and the new generation of OOs that would result would also start to regenerate community infrastructure a lot more than any NuLab-inspired quangos ever could.

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If they put themselves into that position then they deserve to face the consequences.

I have to wonder how many people have actually read and understood a mortgage contract and the full possible knock on affects thereafter

Edited by meow

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It's a sobering thought that what HPCers really really want will cause untold misery to some of our friends and relatives. They genuinely believed that they were doing the best for themselves and their families; it's not like a tulip mania where you have every reason to laugh at those who got sucked in.

But it has to be done :(

Are you sure about that? regarding tulips? I am sure they had very "sensible" arguments back then. Probably more sensible than "bricks and mortar will always go up in value". Like: " But if you buy a tulip bulb, and plant it, you will have more tulip bulbs next year! It is fail proof! "

Houses don't even reproduce themselves! ;)

.

Edited by Tired of Waiting

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I don't think it's as simple as defending or attacking that analogy: there are some aspects in common, but not all of them.

I agree that the issue is morally difficult. Personally a house price crash would be the best thing that could happen to me: I have around £80k in savings waiting for prices to drop to something approaching a sane level, currently earning sod all interest. Yet at the same time I have a close friend and a cousin who bought in 2007 and '08 respectively, and who would be in serious trouble were that crash to happen (at the very least, would be trapped and unable to move while sinking mortgage payments into an NE asset). These people are not BTL-ers who were out to make money cynically out of their less fortunate fellow citizens, and nor were they motivated to buy by the prospect of cashing in on HPI.

Yet at the same time, there are a lot of people out there who were motivated by HPI-inspired greed, either as OOs or BTL-ers. And furthermore, the inability of the majority of average earners in their 20s and 30s to become homeowners is causing significant social and economic problems. Say what you like about Maggie, but I think her instinct about owner occupation was the right one: that if you own your home you're more likely to feel invested in the town/community in which you live, and that there is only such a thing as society if it's driven from the ground up, not from the top down. A reduction in house prices to around historical norms would cause some people pain in the short-term, but in the medium and long term would encourage investment back into productive sectors of the economy, and the new generation of OOs that would result would also start to regenerate community infrastructure a lot more than any NuLab-inspired quangos ever could.

If you feel so bad for your close friend and cousin then if/when the HPC starts to affect them and they find themselves in the position you describe use your 80k and bail 'em out. I'm sure they'd do the same for you.

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It's a sobering thought that what HPCers really really want will cause untold misery to some of our friends and relatives. They genuinely believed that they were doing the best for themselves and their families;

Hang on, what were we thinking ??. OK lets not have a HPC, lets prop up your friends/families unsustainable lifestyles and shatter their dreams of free money for doing nothing. Its obviously much fairer and involves less "misery" to condemn the next generation of home buyers to debt slavery, and the wider economy to a downward spiral of falling exports and rising unemployment through higher local production costs (from higher housing costs). In the mean time lets steal wealth from net savers via low IRs/QE/Sterling devaluation/inflation/Mortguage support schemes etc etc.

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It's a sobering thought that what HPCers really really want will cause untold misery to some of our friends and relatives. They genuinely believed that they were doing the best for themselves and their families; it's not like a tulip mania where you have every reason to laugh at those who got sucked in.

But it has to be done :(

'They genuinely believed that they were doing the best for themselves and their families...'

Really? I'm sure I recall occasions in mid 2007 when I STR that I was at the butt end of quite a bit of mocking by a certain friend who bought a house then lauded it over me.

Fast-forward 3 years and same friend now underwater by at least 40k on a 180k INT only mortgage and he seems to have got selective amnesia that I warned him about over-leverage and that the housing market was seriously over-heating. Afaic people like these are the masters of their own demise.

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It's a sobering thought that what HPCers really really want will cause untold misery to some of our friends and relatives.

The 'misery' is as illusionary as their 'wealth' - it's based on the notion that renting is Dante's first circle of hell... well, there is the debt following them around, but I doubt, when it comes to repossessions, that the outstanding debt is the source of the 'misery'.

I do feel sorry for all - pain, imaginary or not, is not something to wish on others. I feel especially sorry for anyone with a reasonable mortgage who ends up losing out just through losing their job, etc.

However, in the long run, we need cheaper housing and we need to make sure that people remain terrified for as many generations as possible about treating housing as an investment...

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The 'misery' is as illusionary as their 'wealth' - it's based on the notion that renting is Dante's first circle of hell... well, there is the debt following them around, but I doubt, when it comes to repossessions, that the outstanding debt is the source of the 'misery'.

I do feel sorry for all - pain, imaginary or not, is not something to wish on others. I feel especially sorry for anyone with a reasonable mortgage who ends up losing out just through losing their job, etc.

However, in the long run, we need cheaper housing and we need to make sure that people remain terrified for as many generations as possible about treating housing as an investment...

+1

I'll consider it job done when there are children's nursery rhymes about the folly of rampant HPI and housing bubbles.

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Taking on a big debt commitment today is taking on a big risk...the consequences are you will find you have a far less disposable income than you will have probably been used to....a shock for some. ....once you have lived with a bit of hardship that requires tight money management when things get better that skill tends to say with you.....not a bad thing. ;)

Edited by winkie

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even though the last 10 years have been a gutter rush, i still cant feel shadenfraude fully. i keep remembering humans are just fallible people who love the smell of onions. how can you hate a human who likes the smell of onions cooking or get suckered into texting a vote from the tv ?

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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