dances with sheeple Posted March 27, 2012 Share Posted March 27, 2012 since when did your increase in equity buy another house? LOANS do that.......your 90K loan has turned into 220K--- Someone eles`s loan is your equity though in a ponzi scheme? works until it stops working? Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted March 27, 2012 Share Posted March 27, 2012 Someone eles`s loan is your equity though in a ponzi scheme? works until it stops working? thats exactly right, your first rung you bought for 100 and sold for 200 now needs a person in the same position to deposit 20K and get a 180K loan. How does that work?...schemes, low rates, 10 x salary mortgages, IO, and LIAR loans, of course. Quote Link to comment Share on other sites More sharing options...
Pent Up Posted March 27, 2012 Share Posted March 27, 2012 (edited) I think it's more to do with how in a rising market your equity grow. Take this example: I start with a 10% deposit on a 100k home = 10k 4 years later (if we go back in time to 1999 to 2003), my house is worth 200k Suddenly I have 110k equity in a 200k house. Time to move up the ladder and put down say 33.3% down on a 330k home. 4 years later (2003 to 2007), my 330k house is now worth 500k. My original 10k has become 280k worth of equity in my half-mil house!!!! The trouble is this breaks down as soon as property stops going up in value, and it becomes clear that it’s not a property ladder, it’s a ponzi scheme that just happens to look a bit like a ladder when everything’s going ok. Edit to correct a percentage error half way through my working! That's total ******** because each move is costing you substantially more, which either comes from a bigger mortgage or huge wage rises.Which was my original point. Edited March 27, 2012 by Pent Up Quote Link to comment Share on other sites More sharing options...
Dorkins Posted March 27, 2012 Share Posted March 27, 2012 I would agree with that, so why the hell do they keep going on about ladders? The answer is probably to convince youngsters that the only way they will ever own a house is to "get on the ladder now", which in today's market is a nonsense. I'd go so far as to say that we now have the opposite of a 1970s-style housing ladder. Rather than buying ASAP so you can have your mortgage debt wiped out by wage inflation, nowadays the longer you wait the nicer the house you will one way be able to buy. Quote Link to comment Share on other sites More sharing options...
dances with sheeple Posted March 27, 2012 Share Posted March 27, 2012 thats exactly right, your first rung you bought for 100 and sold for 200 now needs a person in the same position to deposit 20K and get a 180K loan. How does that work?...schemes, low rates, 10 x salary mortgages, IO, and LIAR loans, of course. So is it safe to say, with the exception of headline grabbing "schemes", the rest no longer exist for the masses, in fact the government seem to be indicating a desire for movement in the property market rather than propping up the stagnant remains of a ponzi scam? Quote Link to comment Share on other sites More sharing options...
19 year mortgage 8itch Posted March 27, 2012 Share Posted March 27, 2012 I'd go so far as to say that we now have the opposite of a 1970s-style housing ladder. Rather than buying ASAP so you can have your mortgage debt wiped out by wage inflation, nowadays the longer you wait the nicer the house you will one way be able to buy. You try convincing someone who thinks renting is dead money and cannot see past the fact that the monthly mortgage now is less than the rent. Quote Link to comment Share on other sites More sharing options...
benzlife Posted March 27, 2012 Share Posted March 27, 2012 That's total ******** because each move is costing you substantially more, which either comes from a bigger mortgage or huge wage rises.Which was my original point. You're right you do need to increase your mortgage all the time, but in the midst of a bubble people are willing to extend themsevles more and more each time (and our banks were happy to oblige). I "missed the boat" (that's an EA term for you), but think of how it must have felt to Joe public getting all that money for doing nothing. So, they traded up, again and again. Hence the ladder. Quote Link to comment Share on other sites More sharing options...
Killer Bunny Posted March 27, 2012 Share Posted March 27, 2012 My guess is that it comes from people who bought in the 1960s/70s who were able to quickly wipe out mortgage debt thanks to wage inflation. The unexpectedly easy acquisition of equity meant they could upgrade to better properties every few years with relative ease. Of course this equity came at a price, which was the real terms destruction of other people's savings. And we have such high earnings inflation now... Quote Link to comment Share on other sites More sharing options...
Monkey Posted March 27, 2012 Share Posted March 27, 2012 That's total ******** because each move is costing you substantially more, which either comes from a bigger mortgage or huge wage rises.Which was my original point. Yes, but remove logic, remove the extra interest payments, etc and add in 1 Female to the mix, the meeja and you've made an instand £300k proffit in an illiquid assett. and they saw MEWing as a way to make it Liquid. it does to matter what logic says, the sheeple will lap anything up, that gives them "free" money. "ohh i bought a BMW 5 series, and go on 3 holidays a year from the proffit of my house." no you havent, you've just taken on a bigger mortgage, there was never any proffit UNTIL you sell it. Quote Link to comment Share on other sites More sharing options...
dances with sheeple Posted March 27, 2012 Share Posted March 27, 2012 You try convincing someone who thinks renting is dead money and cannot see past the fact that the monthly mortgage now is less than the rent. Being unable to sell the house might convince them? Quote Link to comment Share on other sites More sharing options...
19 year mortgage 8itch Posted March 27, 2012 Share Posted March 27, 2012 That's total ******** because each move is costing you substantially more, which either comes from a bigger mortgage or huge wage rises.Which was my original point. People never see the bigger loan, they only see the equity. "If I sold up now I'd have £XXXXX in my pocket", they never do, of course... Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted March 27, 2012 Author Share Posted March 27, 2012 I'd go so far as to say that we now have the opposite of a 1970s-style housing ladder. Rather than buying ASAP so you can have your mortgage debt wiped out by wage inflation, nowadays the longer you wait the nicer the house you will one way be able to buy. Can you imagine the BBC talking about "getting on the property snake"? No way would they do that. So, to be neutral, they should stop talking about ladders too and just say "buying a house", or "taking out a mortgage on a house". Quote Link to comment Share on other sites More sharing options...
19 year mortgage 8itch Posted March 27, 2012 Share Posted March 27, 2012 Being unable to sell the house might convince them? No, their house is special and it will sell in 3 weeks for over asking price, breaching the street ceiling price, don'tcha know and they can go and buy the lovely house they like with all the money they have made. Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted March 27, 2012 Author Share Posted March 27, 2012 You try convincing someone who thinks renting is dead money and cannot see past the fact that the monthly mortgage now is less than the rent. Not where I'm renting. Quote Link to comment Share on other sites More sharing options...
19 year mortgage 8itch Posted March 27, 2012 Share Posted March 27, 2012 Not where I'm renting. Please Bruce, don't go into that, I'm the same. I'm talking about people in Stabsville and Hick Village. Quote Link to comment Share on other sites More sharing options...
dances with sheeple Posted March 27, 2012 Share Posted March 27, 2012 No, their house is special and it will sell in 3 weeks for over asking price, breaching the street ceiling price, don'tcha know and they can go and buy the lovely house they like with all the money they have made. Experience is telling the sheeple this no longer applies though? Must be nearly nationwide squeaky bum time? Quote Link to comment Share on other sites More sharing options...
zebbedee Posted March 27, 2012 Share Posted March 27, 2012 (edited) You're right you do need to increase your mortgage all the time, but in the midst of a bubble people are willing to extend themsevles more and more each time (and our banks were happy to oblige). I "missed the boat" (that's an EA term for you), but think of how it must have felt to Joe public getting all that money for doing nothing. So, they traded up, again and again. Hence the ladder. What money did they get, they either i) traded up for more debt or ii) 'released equity'* to buy cars, sound systems and holidays * I know I just love the euphimism that sounds so much like not more debt, 'release the equity' or borrow more money Mmmm which would you prefer to do Edited March 27, 2012 by zebbedee Quote Link to comment Share on other sites More sharing options...
Guest tbatst2000 Posted March 27, 2012 Share Posted March 27, 2012 Television news channels always talk about "getting on the property ladder", why can't they just say "buy a house"? Yes, and houses are never bought, only ever 'snapped up', even when they've been on the market for a year or more. Oh, and buyers are never anything other than 'canny' or 'savvy' even when they were taking out 125% mortgages from Northern C0ck. This hideous subversion of the English language by the marketroids makes me want to vomit. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted March 27, 2012 Share Posted March 27, 2012 People never see the bigger loan, they only see the equity. "If I sold up now I'd have £XXXXX in my pocket", they never do, of course... thats because the bigger loan is from another person down the chain....the rises can only be sustained in this manner if there are new entrants to the scheme to pay off the early adopters...the very definition of a PONZI SCHEME...one that needs new money to pay the old. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted March 27, 2012 Share Posted March 27, 2012 Yes, and houses are never bought, only ever 'snapped up', even when they've been on the market for a year or more. Oh, and buyers are never anything other than 'canny' or 'savvy' even when they were taking out 125% mortgages from Northern C0ck. This hideous subversion of the English language by the marketroids makes me want to vomit. this post is soaring! Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted March 27, 2012 Author Share Posted March 27, 2012 Hold off buying and watch those prices drop Translation for the masses... "Don't get on the ladder snake yet". Quote Link to comment Share on other sites More sharing options...
(Blizzard) Posted March 27, 2012 Share Posted March 27, 2012 The use of the word 'property' is extremely sinister, because the one thing that absolutely cannot be property, is land. The use of the word 'property' to mean land is exactly the kind of thing Orwell was writing about. Quote Link to comment Share on other sites More sharing options...
Bland Unsight Posted March 27, 2012 Share Posted March 27, 2012 As noted above, the idea of a "property ladder" is a neat way of summing up a collection of vaguely held connected beliefs (renting is dead money, if I don't buy now I won't be able to later..) which really mean "house prices will only ever go up and they will always go up faster than wage inflation". As the first belief has been untrue at intervals in nominal terms throughout history and the second belief has been untrue for about the last 30 years, using the term "property ladder" is just a coded way of saying "I don't know anything but I'm sure that if I borrow a ton of money and stick in an illquid assest then everything will be fine because that is what everyone else appears to be doing". Quote Link to comment Share on other sites More sharing options...
Monkey Posted March 28, 2012 Share Posted March 28, 2012 ok, how about a "securred tennancy based on your ablilty to pay and or get a money laundering company to stump up the money for the going rate at the time of swapping FIAT for a collection of raw materials that have been arranged in such a way that a person can reside within the limits of rollercoaster" Quote Link to comment Share on other sites More sharing options...
dances with sheeple Posted March 28, 2012 Share Posted March 28, 2012 Yes, and houses are never bought, only ever 'snapped up', even when they've been on the market for a year or more. Oh, and buyers are never anything other than 'canny' or 'savvy' even when they were taking out 125% mortgages from Northern C0ck. This hideous subversion of the English language by the marketroids makes me want to vomit. The way the sheeple sucked it up makes me want to vomit even more. Positive words to make getting into tons of debt seem like a great idea.Many will now want to default rather than pay down the N.E? This should hurt banks and push borrowing rates up? Quote Link to comment Share on other sites More sharing options...
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