canbuywontbuy Posted August 26, 2015 Share Posted August 26, 2015 So in your opinion, if they were to slightly tighten within the next few months.... what will happen? The base rate is just one tool. They have tightened since the crisis; many people said the same thing about them never tapering QE. Nothing much, because that's just a gesture without constant, incremental increases that add 1 or 2% to a base rate over 1 to 2 years. Will banks give higher savings rates? What's 0.25% extra if they pass the saving on? Nothing much. Another 0.25% to a mortgage? Nothing much. So to answer your question: nothing much outside of token market reactions to the gesture. Japan have "slightly tightened" in the past - up a quarter of a percent, then back down again. Not saying central banks won't do similar gestures (and it would only be a gesture), but I don't see them incrementally increasing rates several times over a long period of time, signalling a genuinely recovering economy. Quote Link to comment Share on other sites More sharing options...
canbuywontbuy Posted August 26, 2015 Share Posted August 26, 2015 (edited) Nonsense. We bought a nice end of terrace 2 bedroom house, in a nice area, for £80,000 with a 25% deposit. Our mortgage interest rate is 2.49% + boe base rate. We bought the house in January 2013. Our mortgage is £246 per month. Our aim is to be mortgage free within 10 years. We bought the house from a guy who paid £106,000 for it four years earlier. Ridiculously high house prices are just an English problem now. Well, I'm at least half-right from your anecdote (the guy you bought it off was....a bit foolish - and he'd bought in the last 10 years). I still think £80,000 is really over-priced for a 2-bed terraced - yes, I admit I'm a bit strange but I own property abroad where prices are vastly lower than the UK, and I think the UK housing market is massively and stupendously over-priced. I also understand many have no choice - life is too short - AND that there simply is NOT going to be an HPC in the UK of any significant magnitude that would make housing truly affordable. 10 to 20% drops would be a joke given current prices, yet 10 to 20% drop would constitute as a crash. In essence, the UK is forcing many people to be foolish (unless you plan to emigrate). I stand to be corrected of course. Edited August 26, 2015 by canbuywontbuy Quote Link to comment Share on other sites More sharing options...
CyberNat Posted August 26, 2015 Share Posted August 26, 2015 Well, I'm at least half-right from your anecdote (the guy you bought it off was....a bit foolish - and he'd bought in the last 10 years). I still think £80,000 is really over-priced for a 2-bed terraced - yes, I admit I'm a bit strange but I own property abroad where prices are vastly lower than the UK, and I think the UK housing market is massively and stupendously over-priced. I also understand many have no choice - life is too short - AND that there simply is NOT going to be an HPC in the UK of any significant magnitude that would make housing truly affordable. 10 to 20% drops would be a joke given current prices, yet 10 to 20% drop would constitute as a crash. In essence, the UK is forcing many people to be foolish (unless you plan to emigrate). I stand to be corrected of course. Don't get me wrong, I don't totally disagree with what you were saying as long as it was in the context of English house prices versus UK house prices. There are pockets of Scotland where house prices are very expensive but these pockets are where you would expect them to be. Aberdeen, Central Edinburgh, St Andrews etc. Yes the previous owner of our house was an idiot for paying what he paid and I think even at the time he bought it he paid well over the odds. Every time I visit England I always make a point of having a look at Estate agents windows and it shocks me how expensive the houses are. I feel very sorry for people my age living in England. Anytime my Wife watches one of those stupid property programs it blows my mind how much people are paying for run down hovels in England. It seems to be that house prices are vastly overpriced nearly everywhere you go in England as opposed to Scotland where they are more reasonably priced apart from the expensive, very desirable pockets. Quote Link to comment Share on other sites More sharing options...
Maynardgravy Posted August 26, 2015 Share Posted August 26, 2015 Nonsense. We bought a nice end of terrace 2 bedroom house, in a nice area, for £80,000 with a 25% deposit. Our mortgage interest rate is 2.49% + boe base rate. We bought the house in January 2013. Our mortgage is £246 per month. Our aim is to be mortgage free within 10 years. We bought the house from a guy who paid £106,000 for it four years earlier. Ridiculously high house prices are just an English problem now. I could buy four of those for cash. No thanks. Quote Link to comment Share on other sites More sharing options...
crashmonitor Posted August 26, 2015 Share Posted August 26, 2015 (edited) I just don't want my EARNT wealth being eroded by inflation and/or stupid low interest rates. The CPI, if you believe it , says otherwise....10 2/3 years from the 100 base in January 2005 takes us to 28% inflation (128.0). Even the most sloppy building society investments have yielded 50% over that time with rates up to 7% (5.4% net) as late as 2007 and running through to 2012 on fixes. Equities are probably less from that point and property has just been absolutely dreadful......zero in most of the country, completely crucified in northern towns like Blackburn, Hull and Doncaster (about 20% off 2005). Cash has probably had its best ten years in history, those that have stuck it out have won the race end of (London and the South East excepted) An unbiased assessment from someone 55% in cash, 25% in property and 20% in equity. the cash has slaughtered the other two. The bear on his back is pondering why he just didn't stick to 100% cash. Edited August 26, 2015 by crashmonitor Quote Link to comment Share on other sites More sharing options...
_CC_ Posted August 26, 2015 Share Posted August 26, 2015 Nothing much, because that's just a gesture without constant, incremental increases that add 1 or 2% to a base rate over 1 to 2 years. Will banks give higher savings rates? What's 0.25% extra if they pass the saving on? Nothing much. Another 0.25% to a mortgage? Nothing much. So to answer your question: nothing much outside of token market reactions to the gesture. Japan have "slightly tightened" in the past - up a quarter of a percent, then back down again. Not saying central banks won't do similar gestures (and it would only be a gesture), but I don't see them incrementally increasing rates several times over a long period of time, signalling a genuinely recovering economy. You've gone from stating they are unable to raise rates to just being able to raise them to a couple of percentage over 1-2 years at a gradual pace... I'm not sure totally on impact, although a 1-2% interest increase on a mortgage may not be "nothing much" for some households (possibly a ~£100-200 per month increase?). Quote Link to comment Share on other sites More sharing options...
CyberNat Posted August 26, 2015 Share Posted August 26, 2015 (edited) I could buy four of those for cash. No thanks. For £240k in Scotland you could easily buy a very nice 4 bed house in a nice area and be mortgage free. In England, £240k wouldn't get you the same quality of housing. Edit. Just did a quick search on Rightmove and the first result to come up was: http://www.rightmove.co.uk/property-for-sale/property-52637561.html That is a really nice house (for my taste anyway!). Versus England: http://www.rightmove.co.uk/property-for-sale/property-52312298.html Edited August 26, 2015 by CyberNat Quote Link to comment Share on other sites More sharing options...
_CC_ Posted August 26, 2015 Share Posted August 26, 2015 Nonsense. We bought a nice end of terrace 2 bedroom house, in a nice area, for £80,000 with a 25% deposit. Our mortgage interest rate is 2.49% + boe base rate. We bought the house in January 2013. Our mortgage is £246 per month. Our aim is to be mortgage free within 10 years. We bought the house from a guy who paid £106,000 for it four years earlier. Ridiculously high house prices are just an English problem now. I feel anyone waiting for a major house price crash will probably end up being disappointed. Yes, houses in most of the UK are at a high price compared to the long run average, but if there's a house you like and you can truly afford it then personally I would buy regardless. Quote Link to comment Share on other sites More sharing options...
Austin Allegro Posted August 26, 2015 Share Posted August 26, 2015 Easy.....play your own game, just save 0.5% more and create your own interest rate rise. Yes this is my approach...save more, spend less and create more income streams. Quote Link to comment Share on other sites More sharing options...
nnails Posted August 26, 2015 Share Posted August 26, 2015 Nonsense. We bought a nice end of terrace 2 bedroom house, in a nice area, for £80,000 with a 25% deposit. Our mortgage interest rate is 2.49% + boe base rate. We bought the house in January 2013. Our mortgage is £246 per month. Our aim is to be mortgage free within 10 years. We bought the house from a guy who paid £106,000 for it four years earlier. Ridiculously high house prices are just an English problem now. i brough my semi detached house, nice area for 150k with 50% deposit from person who as owend the house for 10year and paid the same price. I have 10year fix of 3% and i am also going to try to be mortgage free within 10years. I had reqched the point it was now or never to own my own house Quote Link to comment Share on other sites More sharing options...
CyberNat Posted August 26, 2015 Share Posted August 26, 2015 I feel anyone waiting for a major house price crash will probably end up being disappointed. Yes, houses in most of the UK are at a high price compared to the long run average, but if there's a house you like and you can truly afford it then personally I would buy regardless. Yep. I don't think (outside of London) there is likely to be a large drop in prices either. I think they will stay broadly flat for quite some time. This is bad news for young people in England (don't really know about Wales or NI) and my sympathies go out to them. If however you have the cash available to buy a house (assuming you are interested in buying a house) but are choosing not to do so out of some sort of misguided principle, then you will only have yourself to blame when in 10 years time, things are pretty much the same as they are now and you have spent all that money paying your landlords mortgage. Quote Link to comment Share on other sites More sharing options...
CyberNat Posted August 26, 2015 Share Posted August 26, 2015 i brough my semi detached house, nice area for 150k with 50% deposit from person who as owend the house for 10year and paid the same price. I have 10year fix of 3% and i am also going to try to be mortgage free within 10years. I had reqched the point it was now or never to own my own house Sounds to me like that was the sensible thing to do in your position. Some people on here with their large amount of savings will be 80 by the time they accept reality and finally buy! Quote Link to comment Share on other sites More sharing options...
canbuywontbuy Posted August 26, 2015 Share Posted August 26, 2015 (edited) You've gone from stating they are unable to raise rates to just being able to raise them to a couple of percentage over 1-2 years at a gradual pace... No I haven't - re-read my posts. I'm saying that they are pretending to have the choice to raise rates, when they don't have a choice. A gesture 0.25% rate rise does not count if it's not part of constant incremental raises. I have said they do NOT have the option to raise rates up 1 to 2% over a 1 or 2 year period. Edited August 26, 2015 by canbuywontbuy Quote Link to comment Share on other sites More sharing options...
Steppenpig Posted August 26, 2015 Share Posted August 26, 2015 It would be nice if there was some sort of index of pension worth, so that the people could see how pensions were tanking while house prices and stocks were booming. Quote Link to comment Share on other sites More sharing options...
billybong Posted August 26, 2015 Share Posted August 26, 2015 (edited) Quite interesting how the price of oil pattern seems to have been broadly correlated with the house price pattern over the years shown. Edited August 26, 2015 by billybong Quote Link to comment Share on other sites More sharing options...
CheckItOut Posted August 26, 2015 Share Posted August 26, 2015 I feel anyone waiting for a major house price crash will probably end up being disappointed. Yes, houses in most of the UK are at a high price compared to the long run average, but if there's a house you like and you can truly afford it then personally I would buy regardless. Unfortunately that is the truth. I have kids and I can't wait an unspecified time for prices to drop. Just need to compromise and buy an over-priced house that I can afford. Maybe move again in the future if I can afford it. Quote Link to comment Share on other sites More sharing options...
Venger Posted August 26, 2015 Share Posted August 26, 2015 I feel anyone waiting for a major house price crash will probably end up being disappointed. Yes, houses in most of the UK are at a high price compared to the long run average, but if there's a house you like and you can truly afford it then personally I would buy regardless. Unfortunately that is the truth. I have kids and I can't wait an unspecified time for prices to drop. Just need to compromise and buy an over-priced house that I can afford. Maybe move again in the future if I can afford it. US Commercial in 2006 peak. Buy, but don't seek bailouts from others, if HPC occurs soon after. No one owes you the house you want at these prices, outbidding others. It's your choice in a competitive market. Quote Link to comment Share on other sites More sharing options...
winkie Posted August 26, 2015 Share Posted August 26, 2015 Unfortunately that is the truth. I have kids and I can't wait an unspecified time for prices to drop. Just need to compromise and buy an over-priced house that I can afford. Maybe move again in the future if I can afford it. The ironic thing is that only easy excessive debt, longer terms and low interest rates see people can afford it for now......who will be able to afford or even want to buy from you when you wish to sell? Quote Link to comment Share on other sites More sharing options...
CyberNat Posted August 26, 2015 Share Posted August 26, 2015 The ironic thing is that only easy excessive debt, longer terms and low interest rates see people can afford it for now......who will be able to afford or even want to buy from you when you wish to sell? Only true for England. Quote Link to comment Share on other sites More sharing options...
Sour Mash Posted August 26, 2015 Share Posted August 26, 2015 KB is right tho. In the event of a persistent debt deflationary environment, irrespective of low IRs, the long term trajectory for real house prices is for very deep falls, in the long term If the response to the deflation is to print money, repress interest rates and throw taxpayer money into propping up house prices, they can continue to rise for quite some time yet. In fact, with no interest to be had on savings, negative yields on government bonds and volatile stock markets, they may be seen as the way to get some return on capital. Quote Link to comment Share on other sites More sharing options...
_CC_ Posted August 26, 2015 Share Posted August 26, 2015 US Commercial in 2006 peak. Buy, but don't seek bailouts from others, if HPC occurs soon after. No one owes you the house you want at these prices, outbidding others. It's your choice in a competitive market. The two people in this thread who have mentioned buying aim to be mortgage free within 10 years; hardly sounds like people in a perilous financial position. Quote Link to comment Share on other sites More sharing options...
canbuywontbuy Posted August 26, 2015 Share Posted August 26, 2015 The two people in this thread who have mentioned buying aim to be mortgage free within 10 years; hardly sounds like people in a perilous financial position. We all make choices. Some choices have a bigger opportunity cost than others. Buying property in the UK comes with a huge opportunity cost. Even when you pay off your mortgage, the opportunity cost does not go away. You need to cash in your investment for other opportunities to become available. I see buying a (reasonable) property as like buying a car. It shouldn't be a big deal, financially. Buy in cash. Buy in low 5 figures (sub £30,000) - of course, this precludes buying in the UK. Quote Link to comment Share on other sites More sharing options...
Venger Posted August 26, 2015 Share Posted August 26, 2015 The two people in this thread who have mentioned buying aim to be mortgage free within 10 years; hardly sounds like people in a perilous financial position. oOOHHHH. Some of us can buy outright today, but choose not to. Market. Quote Link to comment Share on other sites More sharing options...
_CC_ Posted August 26, 2015 Share Posted August 26, 2015 We all make choices. Some choices have a bigger opportunity cost than others. Buying property in the UK comes with a huge opportunity cost. Even when you pay off your mortgage, the opportunity cost does not go away. You need to cash in your investment for other opportunities to become available. I see buying a (reasonable) property as like buying a car. It shouldn't be a big deal, financially. Buy in cash. Buy in low 5 figures (sub £30,000) - of course, this precludes buying in the UK. I can't say I follow. The cost of not buying could be greater for them. If they can become mortgage free in 10 years, and they are relatively young, they could have many years with substantial lower housing costs as they'll have no mortgage or rent to pay - regardless of what happens to the asset price itself. They could use this extra money to invest elsewhere or enjoy the higher disposable income, depending on their choice. Quote Link to comment Share on other sites More sharing options...
CyberNat Posted August 26, 2015 Share Posted August 26, 2015 (edited) We all make choices. Some choices have a bigger opportunity cost than others. Buying property in the UK comes with a huge opportunity cost. Even when you pay off your mortgage, the opportunity cost does not go away. You need to cash in your investment for other opportunities to become available. I see buying a (reasonable) property as like buying a car. It shouldn't be a big deal, financially. Buy in cash. Buy in low 5 figures (sub £30,000) - of course, this precludes buying in the UK. Whatever you say man. I bought my house to live in. I don't care if it's value halves in a year or doubles. It won't make any difference to us. Edited August 26, 2015 by CyberNat Quote Link to comment Share on other sites More sharing options...
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