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Blanchflower Says Prices To Fall 20%

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Blanchflower was on Radio 4 at 6:15am today, expressing concern about people switching to interest-only mortgages and not being able to afford it when interest rates rise. He also said that prices would drop another 20%.

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Blanchflower was on Radio 4 at 6:15am today, expressing concern about people switching to interest-only mortgages and not being able to afford it when interest rates rise. He also said that prices would drop another 20%.

Blanchflower is talking sense for once.

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Oh gawd.... we don't want him on board. He's nuttier than most on here

Edited by sbn

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Fivelive reporting on this now - several hundred thousand moving from repayment to interest only mortgage.

Interestingly, they commented that the average mortgage in the UK now is 109K - can any HPCer buy a decent house for 109K?

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Of course his agenda is to keep interest rates low

+1

Although any potential first time buyer listening to that might be having second thoughts now.

Edited by Pent Up

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So this where we are, the sheeple can only afford to stay in their homes if they pay "interest only" – they may as well be renting.

It's a trap, and it's going to end badly.

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So this where we are, the sheeple can only afford to stay in their homes if they pay "interest only" – they may as well be renting.

It's a trap, and it's going to end badly.

They'd be much better off renting. Your money's not locked into an illiquid, depreciating, asset when you rent.

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They'd be much better off renting. Your money's not locked into an illiquid.

1. Renting is currently much more expensive than IO

2. If you're on near/no-equity then there's nothing to be liquid with.

Fact is, if you've got the means to pay it off you're laughing with a mortgage compared to renting at the moment.

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1. Renting is currently much more expensive than IO

2. If you're on near/no-equity then there's nothing to be liquid with.

Fact is, if you've got the means to pay it off you're laughing with a mortgage compared to renting at the moment.

You removed the depreciating bit when you quoted my post and therein lies the answer ;).

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1. Renting is currently much more expensive than IO

2. If you're on near/no-equity then there's nothing to be liquid with.

Fact is, if you've got the means to pay it off you're laughing with a mortgage compared to renting at the moment.

1. It depends what the interest rate is, which means you need a big deposit if you want a low rate.

2. See above.

I rent a place for £440 pm, which costs £125k (down from £195k at the peak). I'd need to lay down a 10% deposit (in a falling market) and find a 4.6% deal to be cheaper. That would need to be a pretty good deal and even then, why buy when the prices are still falling?

I wouldn't bother with IO mortgages in this sort of market. It's not worth the risk.

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You removed the depreciating bit when you quoted my post and therein lies the answer ;).

Not at all. Prices aren't budging at all. The overpayments you could make on a mortgage would significantly offset any depreciation.

If you had a £100,000 mortgage, your repayments when rates were at 5% would have been £591, of which £416 was interest, meaning you would pay £2k off the principal sum each year.

Now that your rate has dropped to 2.5% your £591 payment now has only £208 of interest, leaving you to pay off £4600 off the mortgage each year. Prices aren't falling that fast.

Edited by exiges

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So this where we are, the sheeple can only afford to stay in their homes if they pay "interest only" – they may as well be renting.

It's a trap, and it's going to end badly.

If they are paying around the 'average' £109,000, then they are quids in.

Of course, a lot are paying substantially less than this, after the last few years of paying down the principal. :)

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Getting a little concerned about the meedya and people like Blanchflower talking up falls.

This is typical of the media spin both going into the tops and troughs of cycles.

I'd be keeping an eye out for inflation starting to peak and turn down, followed by a further round of QE into the autumn/Q1 '12.

I'm also wondering if when the banksters have switched enough people onto IO they'll do something 'banksterish' like decide they have the right to take an equity stake in the property equivalent. They won't just be doing it to avoid repos, they'll have a longer term outcome in mind too.

We know the big players, Santander and Lloyds are actively looking at ways to support and rig the market together with the CML as well as to bolster their own balance sheets and they'll do absolutely anything and everything they can in this regard. Think the unthinkable. They will.

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Not at all. Prices aren't budging at all. The overpayments you could make on a mortgage would significantly offset any depreciation.

Houses, similar to the one I'm renting, were listed at £400k five years ago and are listed at £350K now. Had I bought five years ago, I'd have been more than £50K out of pocket.

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I don't think there is one right answer. I am thinking of going IO in a few years time. If my mortgage is £60,000 and my savings are £60,000 and I can earn more on my saving than I pay on my mortgage why not?

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Getting a little concerned about the meedya and people like Blanchflower talking up falls.

This is typical of the media spin both going into the tops and troughs of cycles.

I'd be keeping an eye out for inflation starting to peak and turn down, followed by a further round of QE into the autumn/Q1 '12.

I'm also wondering if when the banksters have switched enough people onto IO they'll do something 'banksterish' like decide they have the right to take an equity stake in the property equivalent. They won't just be doing it to avoid repos, they'll have a longer term outcome in mind too.

We know the big players, Santander and Lloyds are actively looking at ways to support and rig the market together with the CML as well as to bolster their own balance sheets and they'll do absolutely anything and everything they can in this regard. Think the unthinkable. They will.

Locking people into their negative equity home will be the name of the game.

No sales = no falling prices.

They'll probably use Reits as fronts for it.

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Not at all. Prices aren't budging at all. The overpayments you could make on a mortgage would significantly offset any depreciation.

If you had a £100,000 mortgage, your repayments when rates were at 5% would have been £591, of which £416 was interest, meaning you would pay £2k off the principal sum each year.

Now that your rate has dropped to 2.5% your £591 payment now has only £208 of interest, leaving you to pay off £4600 off the mortgage each year. Prices aren't falling that fast.

Maybe for the guys at the bottom of the market.

I am renting a five bedroom house with an acre of land for £1200 per month. The estate agent valued the property at £500,000. That's almost £900 per month (based upon 5% IO), not including asset depreciation.

Unless you want to live in a shed with a bed, renting is still cheaper, even at so called 0% IR, and interest rates can only go one way from here.

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Houses, similar to the one I'm renting, were listed at £400k five years ago and are listed at £350K now. Had I bought five years ago, I'd have been more than £50K out of pocket.

Are you quite sure ?

(For the sake of argument)

If you'd bought that £400k house 5yrs ago with a 100% mortgage at 5% your repayment mortgage would have been £2365 pm of which £1666 would have been interest, meaning you'd be paying off £8388 off your principal sum each year

Now, fast forward to 2008 and rates are now 2.5% maintaning a repayment of £2365, £833 would have been interest, meaning that you'd be paying off £18,385 off the principal sum each year.. (£55k off your mortgage)

So actually, you'd have paid off far more than difference in the value, than if you'd done nothing.

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  • 312 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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