Boil My Head, Now.

[Venger]

I really hope your situation can be sorted out SYNT. No-one deserves to be put under that sort of pressure, especially from friends/acquaintances.

So do I. Had an argument all Easter Weekend 2 years ago, about buying, which left me feeling so raw. I understand some of the pressures from the 'not-meeting-her-housing-needs' position. Something triggered it, quite possibly her friends who'd bought somewhere lovely, with parental help I suspect, given the father a recently retired chief exec of a high profile company. Few of those around to help their adult kids. It passed and things have been calm.

I'm guessing for those renting, in their early-mid 30s, with young children involved, such disagreements, when they happen, leave you feeling even worse. I can only hope it was just a release of built-up pressure to the situation, and things will calm again.

Stupid stupid market and policies. Anti-capitalism in my opinion, nearly alll the pain taken by independent younger people working hard to improve their position, and so unhealthy. Feel my younger brother and sister are working so hard - in senior stressful jobs - for nothing, against house prices as they are. Promised them a crash. They've not got any alternative anyway. Neither is willing to borrow/pay for the type of house they could scrape to afford in this market; they both say they work too hard for 2-bed terraces at £200,000+. Osborne's HTB having no attraction to them, with the extra debt being pushed, to pay higher prices, and be in more debt.

Problem being, not much better positioned towards any housing value, after our last big argument. Come on crash. We're way beyond the pain barrier. At least there must be many arguments going on, with people who've over-borrowed and overpaid for a house, and now are struggling, with not much QE/stimulus/downward rate moves to help them. They're probably having worse arguments, for renter/savers still have options not owning / overborrowing.

[19 year mortgage 8itch]

So do I.

I'm not trying to illicit any sympathy, I am just shocked by the emotional baggage and dellusionally optimistic thinking associated with spending a massive amount of money. Its astounding.

What will be, will be now. I've gone too far to start back-pedalling. Apparently you don't mention divorce in polite conversation.

[SuperChimp]

Unfortunately the housing market has behaved anything but rationally so over the last 6 or so years I have been proved wrong time after time becoming somewhat of a Cassandra. The reality of knowing that protecting my family from eventual massive downside exposure is one of the only things that keeps me going.

The real worry is interest rates. Even at BoE base rates of 0.5% with a 20% deposit you are looking at a 5% variable mortgage now. Imagine if interest rates did what they did in the 80s or early 90s and hit above 10%? With no wage inflation you can kiss your house good bye. And imagine what that would do to the wider economy? How much would the pound need to devalue to compensate an economy in free-fall?

The government has been pumping debt into the system and we are seeing a slight rise in GDP as a result but if the markets turn we could be in serious trouble come Christmas. Your wife will see you were right in the end.

My father was a bank manager and he once told me that the only way to beat the market is to wait it out, that all asset prices rise and fall and the only way you as an individual can win is by thinking in years and decades. You buy an asset when nobody else is interested and sell it when everyone is buying.

[wherebee]

I think that it is very sad that husbands and wives come to argue about such a basic commodity as a home. Remember 5 years from now this will be a distant memory but hurtful words can never be taken back.

I hope the governments who fostered this appalling artificial boom all sink without a trace.

I've been divorced once and I can see now that basic incompatibility on any one of the following: finance/sex/cultural standards makes a happy marriage unlikely. To the OP - hang in there, for the sake of you and the kids. Write some of this down in an email to yourself so you can remember her position when interest rates shoot up and people are being repossessed. You might need it to show that you were trying to do the right thing the next time she has a mare.

Oh, and I hope you have secret savings. If not, start taking 100 quid extra a week out of your account and hide it somewhere. If you never get divorced, it's a nice nest egg for a surprise party of holiday. If you do get divorced, it's your chance of balancing the division a bit more fairly.

[StainlessSteelCat]

You have my sympathies, SYNT. My generally sensible missus would often wobble on the house buying front at a certain time of the month. Got to be a predictable strain for the ten years we were renting. Peer pressure, crap in the newspapers and on the box all played its part.

We did eventually buy last year - but it was on my terms and we're both happy in the place (thankfully being in a relatively cheap area of the country, it didn't bankrupt us either). Needless to say, there are new things she worries me about. It doesn't stop with the house, mate.

The price of housing in this country is utterly ridiculous and it's desperately sad that it invades so much of our lives.

[19 year mortgage 8itch]

Its OK we've solved the problem. We're making an offer above asking price at about 4.5x my salary.

Another couple viewing it were about 50, looking for a doer-upper. Its going to be a long time before 30-something's can compete with 30 years of credit bubble.

[Stop The Ride]

I've been divorced once and I can see now that basic incompatibility on any one of the following: finance/sex/cultural standards makes a happy marriage unlikely. To the OP - hang in there, for the sake of you and the kids. Write some of this down in an email to yourself so you can remember her position when interest rates shoot up and people are being repossessed. You might need it to show that you were trying to do the right thing the next time she has a mare.

Oh, and I hope you have secret savings. If not, start taking 100 quid extra a week out of your account and hide it somewhere. If you never get divorced, it's a nice nest egg for a surprise party of holiday. If you do get divorced, it's your chance of balancing the division a bit more fairly.

A divorce sounds quite expensive. Probably cheaper and more pleasant to agree:

1. That you will buy a house within next 9 months.

2. That nobody is to fall in love with any house.

3. That you will find a house that you both like in an area that you both like, but one that you can get a reasonable deal on.

4. That you will do the negotiating.

Then get a fixed rate, accept you'll lose money and don;t think about the money any more. We did this 3 years ago with one small child and another on the way having STR three years previously. It really was the best thing we've done. I rarely think about the value of the house, but I expect it's worth a little more than we paid for it, but we've put some money into it. I expect it will lose value at some point when the bubble bursts, but I'm not bothered.

[Dorkins]

We did this 3 years ago with one small child and another on the way having STR three years previously.

So you had some bubble money you could afford to lose? It's a bit different when you're paying the bubble price out of wages alone.

[Venger]

Its OK we've solved the problem. We're making an offer above asking price at about 4.5x my salary.

Another couple viewing it were about 50, looking for a doer-upper. Its going to be a long time before 30-something's can compete with 30 years of credit bubble.

The couple in their 50s looking at it as a doer-upper? To rent out or flip on, afterwards? Not to live in? More sorts who take forgranted how much their own homes have gone up in value, and look at their cash-savings and say, 'It's not earning anything in the bank'.

Type we know have been responsible for paying outrageous prices for so much of the basic FTB house supply that has come to market, and us then later seeing quite a lot of house sold come back onto the rental market.

The US taper may be weeks away. UK gilt yield have just spiked in space of a few weeks. Five-year swap rates have risen from 1.35% (June 2013) to 2.01%, (as per last time I checked, the other day) the cost of funding going up, which may impact on cheap money for mortgages. BoE might have less room to QE or other stimulus from this point, and relying more on the voice of Carney mouth.

Inventory is said to be ticking up, as perspective of higher prices brings out more sellers - although inventory still limited in our local 'London mirror-ish' regional market.

Offered above asking? We've been proven wrong because of the cheating reflation (£350 Billion + everything else), so I can't say for certain your decision to put an offer is wrong in any way. Wouldn't want to as you know your own circumstances and view on the market. Just there are some interesting market moves going on in the background that might have an affect, and perhaps sooner rather than later. Is it not worth just waiting to see how the US taper affects things at least?

[qejunkie]

The real worry is interest rates. Even at BoE base rates of 0.5% with a 20% deposit you are looking at a 5% variable mortgage now. Imagine if interest rates did what they did in the 80s or early 90s and hit above 10%?

Seriously you need to take a look at lending rates because this would be just the wrong side of 3% on a 5 year fix.

Secondly lending rates are at higher spreads above policy rate (50bps) and market rates (300 bps on 10 year gilt) so the argument would really be that spreads should come in as bank balance sheets are repaired and then policy rates can move upwards. The net effect of both could be limited on overall mortgage lending rates BUT you might see improved savings rates.

Thirdly interest rates blew out because the government was trying to save the currency from a big devaluation. Exactly what is happening in Turkey, India and Indonesia recently. This is because these countries rely on foreign capital AND use cheap money in USD to fund investment in local assets. We don't have the same vunerability anymore so I would expect a higher chance of a Yen style de-val in favour of the domestic ponzi scheme continuing.

Lastly if you add up all of the debt in the UK (all that lovely off balance sheet stuff) then we are at 9x GDP. So if we pay 10% on that then 90% of GDP will service debt. That is like a household where there interest only mortgage is 90% of earnings. We are fully insolvent in that scenario so best have some gold and foreign assets as pound will fall 80%-90% or so. So you will of avoided a house price crash but if you kept money in the UK banking system it is unlikely you would be able to feed your family in any case. In reality 10% interest rates of yesteryear are equivalent to 3-4% in today's world thanks to higher debt burdens.

[qejunkie]

The US taper may be weeks away. UK gilt yield have just spiked in space of a few weeks...........Is it not worth just waiting to see how the US taper affects things at least?

A few points on this one.....

1) US is as bust as the UK and has very similar structural problems. It also has the ticking time bomb of much higher income/wealth divide which might accelerate the collapse of Rome dooms day scenario. But on the plus side has a paper currency that people still want, which is good if you like to print more and more.

2) US mortgage rates, when the US 10 year hit 1.5%, were at about 3.5% for a 30 year fix. At the same time gilts hit the same level and with 25% down you could borrow at 2.8% 5 year fixed in the UK. The market interest rate in the US feeds directly into the economy, over here it doesn't.

3) US 10 year (and UK gilt) hit 3% and US 30 year mortgage has gone from 3.5 to 4.5. What has happened to UK mortgage rates.....nothing. So US got a bigger boost as the treasury bubble peaked and now is getting a little drag as it deflates.

4) The taper could be happening, what if the fed come out and say we've bought no treasuries since August? Yields have doubled dont forget - a big move for a risk free asset.

5) 3% yield on US ten year when US inflation is "always" 2.5% seems like a good price - loads of investors have piled in every time the US 10 year hit 3%.

6) US mortgage re-financing, available homes for sale have all tracked down as mortgage rates move up. Not rocket science. The data in the US firmly points to the fact that the housing recovery IS NOT self sustaining and is a product of cheap money. When UK policy makers (who's primary aim is to keep house bubble inflated) see that, they will likely do more expansionary monetary policy not less.

[Stop The Ride]

So you had some bubble money you could afford to lose? It's a bit different when you're paying the bubble price out of wages alone.

No. We had been first time buyers a couple of years previously. I think our sale price was 10k more than the purchase price and we had put some money into the house.

[qejunkie]

Its OK we've solved the problem. We're making an offer above asking price at about 4.5x my salary.

Another couple viewing it were about 50, looking for a doer-upper. Its going to be a long time before 30-something's can compete with 30 years of credit bubble.

7 Year Itch, your current predicament sounds horrendous and has been an uncomfortable read.

However, if you don't mind me asking.....

If you are borrowing at 2.8% at around 4x your salary then your repayment mortgage should be around 15% of your salary? This seems like a reasonably comfortable level of housing cost to put through your monthly budget.

And if a repayment mortgage is 50% more than you pay on rent then you either live in Kensington (since yields are 2.5%) or you are buying a house which is "worth" more than what you rent (note use of quotation marks there).

Either way it seems like you have a sound financial position and will be moving into a better accomodation. For your own well being you should look at those (and other) near term positives and not worry about what could happen. Also perhaps spending time on this site might not help your mental state once you are commited to the purchase!

[Venger]

Either way it seems like you have a sound financial position and will be moving into a better accomodation. For your own well being you should look at those (and other) near term positives and not worry about what could happen.

Can't you just go away with all your VI position.... All I ever seem to read from you is HPI forever nonsense.

[qejunkie]

Can't you just go away with all your VI position.... All I ever seem to read from you is HPI forever nonsense.

Nah I'm not a HPI forever kind of person. (My position is 3 years of real gains, then we get a real correction, nominal I'm less sure). My bugbear is when people write incorrect things about policy and rates. Like your statement saying that recent market moves of interest rates mean less room for manoeuvre on QE. That actually gives them MORE licence to print. Especially if it starts to impact lending in a negative way.

[Venger]

Nah I'm not a HPI forever kind of person. (My position is 3 years of real gains, then we get a real correction, nominal I'm less sure). My bugbear is when people write incorrect things about policy and rates. Like your statement saying that recent market moves of interest rates mean less room for manoeuvre on QE. That actually gives them MORE licence to print. Especially if it starts to impact lending in a negative way.

Not worry about what could happen..... sheesh.

Comes a point where such printing triggers worse things, against moves in other non UK markets. There has been a few indications QE nearing its limit, and Carney will have to rely on confidence tricks, as if Forward Guidance can work for little UK.

Anyway come on.... give us more new threads on the main forum, and your fancy thinking.

London Is Cheap. http://www.housepricecrash.co.uk/forum/index.php?showtopic=192388

"Seriously all you HPCers out there need to get leveraged long cos this bull market is just getting started!"

http://www.housepricecrash.co.uk/forum/index.php?showtopic=192779&st=0

(BTW it last sold for £347,500 in late 2006).

Good luck 7YI whatever happens.

[qejunkie]

"Seriously all you HPCers out there need to get leveraged long cos this bull market is just getting started!"

http://www.housepricecrash.co.uk/forum/index.php?showtopic=192779&st=0

(BTW it last sold for £347,500 in late 2006).

Lol - lots of sarcasm peppered trough that post that was highlighting some funny asking prices 30% ahead of where they should be in my little corner of the world.

[qejunkie]

Comes a point where such printing triggers worse things, against moves in other non UK markets. There has been a few indications QE nearing its limit, and Carney will have to rely on confidence tricks, as if Forward Guidance can work for little UK.

Please qualify the above statement with something factual. What are the worse things that may be triggered in non UK markets, which would then have an impact on The UK? And forward guidance is a waste of time, everyone knows this especially the bond market. But the real reason for that fanfare was just so he could add 50bps to the inflation target which everyone seemed to miss. Again, not the bond market since they've demanded a bit more yield. And what is the evidence that QE is reaching its limit? The limit of what? Look at the Japanese example, those boys are showing you the limits of QE and until that sucker blows Carney and his cronies will be sleeping pretty easily.

[Venger]

Lol - lots of sarcasm peppered trough that post that was highlighting some funny asking prices 30% ahead of where they should be in my little corner of the world.

Maybe so on that thread, but I disagree with your London thinking.

You got to me because you sound like peddling the same sort of lines 7YI is hearing from friends and family, pushing them to buy, home-ownership matter most, as detailed earlier in the thread.

"Look at near term positives towards buying, and not worry about what could happen." When what could happen, is not something to take lightly, given what looks to many people as very fragile market conditions.

Where others looks like constant QE and keeping "living standards sustained." Not for renters and non-owners, not sustaining their living standards, just depressing them. Perhaps for the gloriously over-indebted and painfully high house values for older owners, to prevent them losing value in their homes. (I've given you something to think about, to counter your happy math, on your London thread.)

[qejunkie]

You got to me because you sound like peddling the same sort of lines 7YI is hearing from friends and family, pushing them to buy, home-ownership matter most, as detailed earlier in the thread.

Well sorry for getting you going. Those comments were made after making 2 clear points about circumstance i.e. being in a good finacial position and having an improvement in accomodation. So there were positive things to focus on.

Clearly the maths of paying 50% more for a repayment mortgage vs. renting is not comparing like with like. Please prove to me I'm wrong on that front?

[Venger]

Well sorry for getting you going. Those comments were made after making 2 clear points about circumstance i.e. being in a good finacial position and having an improvement in accomodation. So there were positive things to focus on.

Clearly the maths of paying 50% more for a repayment mortgage vs. renting is not comparing like with like. Please prove to me I'm wrong on that front?

Another day, re this and the other request (re QE). You're got the 'good news' on your side today; with Carney talking about 'improvement' in house prices. It's no wonder 7YI and so many of us are feeling really up against it, against house prices.

[SuperChimp]

Another day, re this and the other request (re QE). You're got the 'good news' on your side today; with Carney talking about 'improvement' in house prices. It's no wonder 7YI and so many of us are feeling really up against it, against house prices.

State backed mortgages (Help to Buy) and lower capital limits for banks were two of the last policies implemented in the USA prior to the collapse in 2007.

You should only be buying a house now if you can afford to see its value plunge 50% and you can wait 20 years to see the market recover. 0.5% base rates and QE are a desperation move and show the inability of the government to think of anything else to help the economy. If you are buying as a way to "get on the ladder" you couldn't pick a worse time.

[qejunkie]

State backed mortgages (Help to Buy) and lower capital limits for banks were two of the last policies implemented in the USA prior to the collapse in 2007.

You should only be buying a house now if you can afford to see its value plunge 50% and you can wait 20 years to see the market recover. 0.5% base rates and QE are a desperation move and show the inability of the government to think of anything else to help the economy. If you are buying as a way to "get on the ladder" you couldn't pick a worse time.

Are you kidding? US government started backing mortgages when they "invented" Fannie Mae back in 1938. And capital requirements are getting stricter for banks!!

[qejunkie]

Oh and by the way folks I don't have a vested interest in house price inflation. I would love that 50% correction to pick up my dream house. I just try and tell it like it is.

[Mrs Bear]

What I tried to add above 98% chimp, is that doubtless when it all goes tits up your cousin will deny all knowledge of the conversation you had.

Thing is, when people have made up their minds about something, the only 'advice' they really want is any which agrees with them. Yes, brilliant idea,go for it.

Best to save your breath IMO. They won't forget what you said, they will just resent you for having been proved right.