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Baby Boomers Were Handed 'free Housing', Says Top Insurance Boss

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http://www.telegraph.co.uk/finance/personalfinance/houseprices/10804031/Baby-boomers-were-handed-free-housing-says-top-insurance-boss.html

The chief executive of one of Britain's biggest companies, insurer Legal & General, has weighed into the controversial "intergenerational" debate by claiming that baby boomers have "lived for free".

His argument is that house price gains enjoyed by those who bought homes in the 1970s and 1980s have been so great as to entirely offset their mortgage interest costs. In that sense, baby-boomers have paid neither interest nor rent and lived for free.

He painted a dramatic picture of an older generation "sitting on" trillions of pounds worth of housing, while a younger, hard-pressed generation will have to carry debts worth more than a trillion pounds for decades or longer.

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Introducing a stamp duty reduction for the rightsizing elderly would be another step towards this."

When they've known nothing but HPI, another bung for them, whereas younger upsizers expected to pay in full?

They lecture upon high older owners.

They need to experience a buyer drought and hard HPC.

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love this comment :

'if only the Baby boomers could go back in time and use all that increase in value to make the repayments so they didn't have to work to pay the mortgage interest.

But they can't, and equally they didn't get free housing. Isn't inflation a B***h, isn't Nigel Wilson a trouble maker.'

so right.

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so all the interest and capital I paid/repaid on my mortgage was a mistake and never happened,

words fail me. :wacko:

I think he means that the rise in capital value is greater than the total loan and interest cost you paid over the total of 25 years.

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love this comment :

'if only the Baby boomers could go back in time and use all that increase in value to make the repayments so they didn't have to work to pay the mortgage interest.

But they can't, and equally they didn't get free housing. Isn't inflation a B***h, isn't Nigel Wilson a trouble maker.'

so right.

The repayments-to-principal shrank quite quickly with pay rises, and did do for decades.

+ the all the HPI.

Hard hard HPC please. They'll drop dead from reality-shock, when they don't even recognise how easy they've had it now.

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Most boomers have paid off mortgages so what difference would a hpc make? In fact most, including me, would welcome a hpc as it would make life easier for our kids and grandchildren.

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Most boomers have paid off mortgages so what difference would a hpc make? In fact most, including me, would welcome a hpc as it would make life easier for our kids and grandchildren.

Most aren't overly aware of how ludicrously priced property is. And that to buy at these prices when interest rates have only one way to go is financial suicide for most.

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Most aren't overly aware of how ludicrously priced property is. And that to buy at these prices when interest rates have only one way to go is financial suicide for most.

I think you are wrong in your assumption. Most boomers have kids aged around 25-40 who are the age group who are suffering the most from high housing costs. Many boomer parents have and are having to help their kids with property costs and are only too well aware of how high prices are. I speak from personal experience.

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I think you are wrong in your assumption. Most boomers have kids aged around 25-40 who are the age group who are suffering the most from high housing costs. Many boomer parents have and are having to help their kids with property costs and are only too well aware of how high prices are. I speak from personal experience.

I fall into that age group and i do not know 1 person whose parents have financially assisted them in getting a house, though i have helped my financially illiterate boomer parents as all they do is spend spend spend.

Ive always thought of the Bank of Mum and Dad as just being some Islington based media nonsense to entertain the chattering classes.

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I fall into that age group and i do not know 1 person whose parents have financially assisted them in getting a house, though i have helped my financially illiterate boomer parents as all they do is spend spend spend.

I know many people who have had a bung from the Bank of Mum and Dad. In fact, most of the people I know who have managed to buy. It is very definitely a real thing.

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The chief executive of one of Britain's biggest companies, insurer Legal & General, has weighed into the controversial "intergenerational" debate by claiming that baby boomers have "lived for free".

"Lived for free" - they're definitely getting desperate and that statement from a financial sector (the time for remorse is over - stand and deliver a free bonus) Chief Executive. Of course L&G is also a pension company and that sector isn't endemically dodgy :unsure:

The recent Spectator article blaming the government for the crackpot stoke the house prices policy has definitely upset their blame the boomers policy so they're responding with ever more exaggerated claims - the eu elections and the UK by-elections are fast approaching.

http://

blogs.spectator.co.uk/coffeehouse/2014/04/politicians-have-jilted-a-generation-its-wrong-to-say-that-young-people-have-never-had-it-so-good/

Second, I will accuse recent governments of cynically stoking the housing market.

Edited by billybong

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http://www.telegraph.co.uk/finance/personalfinance/houseprices/10804031/Baby-boomers-were-handed-free-housing-says-top-insurance-boss.html

The chief executive of one of Britain's biggest companies, insurer Legal & General, has weighed into the controversial "intergenerational" debate by claiming that baby boomers have "lived for free".

His argument is that house price gains enjoyed by those who bought homes in the 1970s and 1980s have been so great as to entirely offset their mortgage interest costs. In that sense, baby-boomers have paid neither interest nor rent and lived for free.

He painted a dramatic picture of an older generation "sitting on" trillions of pounds worth of housing, while a younger, hard-pressed generation will have to carry debts worth more than a trillion pounds for decades or longer.

Interesting comments - the fight is on.

In the end, who pays?

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I actually read an article predicting this sort of thing in the Guardian of all places back in about 1998 when the great moderation was first being discussed. Essentially saying be careful what you wish for with low inflation and low IRs as mortgage debt would not be inflated away. And then watched as the frenzy of the Brown bubble seemed to prove it was wrong. I suppose it just took a while for people to cotton on to what was happenning. I actually bought soon after and sold in 2007 but that was totally dictated by circumstances (and my girlfriend) rather than my good judgment.

Edited by oldsport

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I know many people who have had a bung from the Bank of Mum and Dad. In fact, most of the people I know who have managed to buy. It is very definitely a real thing.

+1 I personally know at least 4 couples who have had the deposit bank rolled by parents. One couple never even dealt with the estate agents as the girls dad did the entire thing! Another couple gifted the deposited as an early inheritance.

Then one of the other couples saved for a wedding but the parents paid for it instead so they used the saved money as a deposit for their house.

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I think you are wrong in your assumption. Most boomers have kids aged around 25-40 who are the age group who are suffering the most from high housing costs. Many boomer parents have and are having to help their kids with property costs and are only too well aware of how high prices are. I speak from personal experience.

There is going to a wide spectrum encompassing the attitude towards house prices by boomers. And it's not going to spread equally. Certainly some think prices are absurd and every extra year their children stay living with them due these prices more boomers will come around.

But there is still a vast swathe of the boomer population that thinks HPI forever is inevitable and that it was always hard if not harder to get on the ladder when they started.

It is so rare to see enlightened boomers such as this chap in the DT article.

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I think he means that the rise in capital value is greater than the total loan and interest cost you paid over the total of 25 years.

that doesnt mean it was free.

He IS describing a ponzi scheme...the returns are provided by newcomers.

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I'm a boomer, and I can assure you all that I do not know of a single peer who thinks high house prices are a good idea. Most of us are boomerang parents, with "kids" in their thirties still living at home. I've had my son and his wife living with me for several years, for example, and crushing two households into where one should be is not easy. Luckily for him, we subsidised his rent, allowing him to save, and boosted his deposit from the BoMAD, and he bought late last year. He hasn't moved yet as the house needs refurbishing, but it's all he could find. Others are not so lucky. I often ask them, when are they going to kick off politically about it? Don't expect my generation to do your fighting.

As for the boomers had it easy meme, paying nearly a sixth of the purchase price each year in interest is NOT easy, but those were the days when the bank took your ability to repay seriously. Nowadays, the bank takes the attitude that if you can get the deposit together (including crap government schemes) they will lend you the money to buy: BUT, they own the house until you finish paying. So, a long period when the bank owns the house, and if you default, the bank still owns the house.

We've all been shafted.

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I'm a boomer, and I can assure you all that I do not know of a single peer who thinks high house prices are a good idea. Most of us are boomerang parents, with "kids" in their thirties still living at home. I've had my son and his wife living with me for several years, for example, and crushing two households into where one should be is not easy. Luckily for him, we subsidised his rent, allowing him to save, and boosted his deposit from the BoMAD, and he bought late last year. He hasn't moved yet as the house needs refurbishing, but it's all he could find. Others are not so lucky. I often ask them, when are they going to kick off politically about it? Don't expect my generation to do your fighting.

As for the boomers had it easy meme, paying nearly a sixth of the purchase price each year in interest is NOT easy, but those were the days when the bank took your ability to repay seriously. Nowadays, the bank takes the attitude that if you can get the deposit together (including crap government schemes) they will lend you the money to buy: BUT, they own the house until you finish paying. So, a long period when the bank owns the house, and if you default, the bank still owns the house.

We've all been shafted.

That's the problem a whole generation is basically suffering from apathy, the unions have been killed now people in a sense can't afford to revolt and just have to be good debt slaves. Hilarious that everyone thinks the North Koreans are brainwashed!

Edited by interestrateripoff

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I'm a boomer, and I can assure you all that I do not know of a single peer who thinks high house prices are a good idea.

I'm also a boomer but sadly I know many, many other boomers who think,

1. HPI is terrific

2. The fact that they personally benefitted from HPI is a tribute to their shrewdness and therefore entirely deserved

But where it all becomes doubly sad is that I don't see much evidence of greater wisdom and virtue in subsequent generations. Human beings of all ages just seem to have a massive capacity to blame someone else, believe that they're special and entitled, distort the facts to support their own selfish ambitions, and generally whinge and whine their way through life.

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The chief executive of one of Britain's biggest companies, insurer Legal & General, has weighed into the controversial "intergenerational" debate by claiming that baby boomers have "lived for free".


So is this a warning from the Chief Executive that they've had one of those meetings on the economy (for sure including government and BoE representatives as well as the IMF etc - all of which have representation anyway on the IMF etc even if only through the revolving door) and they've decided they're going to crash UK house prices now like they rammed UK house prices up since the late 90s along with other nations house prices.

Possibly Germany resisted the pressure as a special case in trying to absorb East Germany since the early 90s. The last thing it would want was a house price bubble.

There was such a meeting on 12 April 2014 just 3 weeks ago.


http://

www.worldbank.org/en/news/press-release/2014/04/12/imf-world-bank-spring-meetings-2014-development-committee-communique

The meetings in the late 90s would of course include topics like the world economy and different countries economies and that would be in the light of financialisation, deregulation and things like the derivatives (of mass destruction) that allowed banks to lend far more than in the past. That would be when they agreed to let go with the new millennium bubble boom around the globe.

They'll crash the bubble when they decide to (and the way they're talking it does sound quite close) and they won't ask anyone for permission including the boomers like they didn't ask the boomers or anyone else when they created the bubble.

If that's what they're going to do then they should just get on with it instead of wasting more of people's time looking for scapegoats.

Edited by billybong

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Isn't the heart of this story and the L&G Chief Exec pimping his report the fact that housing would be quite a good investment class for the insurer except for the fact that the yields are too low because the prices are too high - and because prices are so high the cost of land with planning permission is high so the potential yields from building new homes for rental is also too low for them to get in the game.

It's yet another big player calling "Bubble!"

At some point it is going to be an obvious political and economic play to crash house prices and start building houses. It will be disastrous for some households, but there just aren't enough households for whom it would be disastrous to make it an impractical play. With the debt still growing Osborne is running out of rope on the current play, (which is ramping house prices).

Edited by ChairmanOfTheBored

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Isn't the heart of this story and the L&G Chief Exec pimping his report the fact that housing would be quite a good investment class for the insurer except for the fact that the yields are too low because the prices are too high - and because prices are so high the cost of land with planning permission is high so the potential yields from building new homes for rental is also too low for them to get in the game.

It's yet another big player calling "Bubble!"

At some point it is going to be an obvious political and economic play to crash house prices and start building houses. It will be disastrous for some households, but there just aren't enough households for whom it would be disastrous to make it an impractical play. With the debt still growing Osborne is running out of rope on the current play, (which is ramping house prices).

I think this is what is actually happening, and I think the dim money and the BTL are going to take a massive hair cut. Electorally this won't be as damaging as first time buyers taking a haircut. No one will shed a tear for bankrupt BTL. In fact a sizeable section will be delighted to see this lot get their come uppance.

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