thewig Posted June 3, 2018 Share Posted June 3, 2018 29 minutes ago, spyguy said: In connection to my comments on the only ratio mattering is wages v. House prices, you have to be aware that the banks and bses have massaged the wage figures, going from average male wage to average household income where the bloke delivers pizza after work and the wife is working in a strip bar. The problem on basing household income on what mr mrs earn, jointly, is that one income goes when jr pops out and does not return til hes moved back in the family home after uni.... MMR totally destroys the last 30 odd years of bank income stats abuse. does it though? haven't they just extended the average term from 25 years to 35 years? Quote Link to comment Share on other sites More sharing options...
Gigantic Purple Slug Posted June 3, 2018 Share Posted June 3, 2018 http://www.thisismoney.co.uk/money/mortgageshome/article-4880966/House-prices-vs-wages-UK-ten-years.html Nice tool for looking at affordability in different areas. Quote Link to comment Share on other sites More sharing options...
dugsbody Posted June 3, 2018 Share Posted June 3, 2018 2 hours ago, thewig said: does it though? haven't they just extended the average term from 25 years to 35 years? Yes. I'm just remortgaging. I couldn't believe it when they offered to extend the term back up to 30 years and drop the rate. I'll be paying the house off WELL into retirement at this rate, which is just fine with me. Quote Link to comment Share on other sites More sharing options...
mrtickle Posted June 3, 2018 Share Posted June 3, 2018 Average term being 35 years? AVERAGE? Surely not. I know they are dead keen to try to trick people into signing up for 30 year mortgages, but I hope with all my might that the AVERAGE isn't 30 years or 35 years. Quote Link to comment Share on other sites More sharing options...
spyguy Posted June 3, 2018 Share Posted June 3, 2018 3 hours ago, thewig said: does it though? haven't they just extended the average term from 25 years to 35 years? Less the extended term - which nuts. But the stuff like working OT, self declaring income, going for higher paying jobs that require expensive commutes, etc. MMR takes p60 income only, deducts all recurring outgoing then puts a 4.5 limit on that money. Quote Link to comment Share on other sites More sharing options...
spyguy Posted June 3, 2018 Share Posted June 3, 2018 41 minutes ago, dugsbody said: Yes. I'm just remortgaging. I couldn't believe it when they offered to extend the term back up to 30 years and drop the rate. I'll be paying the house off WELL into retirement at this rate, which is just fine with me. You need to use excel to check the cost when you go over 20 years. That extra 10 years, from 25 to 35, takes very little off tge minthly, and increases the cost of the mortage by 30% Quote Link to comment Share on other sites More sharing options...
dugsbody Posted June 3, 2018 Share Posted June 3, 2018 4 minutes ago, spyguy said: You need to use excel to check the cost when you go over 20 years. That extra 10 years, from 25 to 35, takes very little off tge minthly, and increases the cost of the mortage by 30% Every bit I'm not spending on the 1.6% mortgage I'm earning > 4% dividends plus capital growth in diversified ETFs. I'm all spreadsheeted up and they tell me that I'm better off extending the term and not paying off the mortgage early. I'm just playing the game in front of me. Maybe I'll get burned but I took too few risks earlier in life so I'm making up for it a little. Quote Link to comment Share on other sites More sharing options...
goldbug9999 Posted June 3, 2018 Share Posted June 3, 2018 2 minutes ago, dugsbody said: Every bit I'm not spending on the 1.6% mortgage I'm earning > 4% dividends plus capital growth in diversified ETFs. I'm all spreadsheeted up and they tell me that I'm better off extending the term and not paying off the mortgage early. I'm just playing the game in front of me. Maybe I'll get burned but I took too few risks earlier in life so I'm making up for it a little. True, getting the longest term possible just gives you more options assuming it doesn't effect the early redemption terms. Quote Link to comment Share on other sites More sharing options...
spyguy Posted June 3, 2018 Share Posted June 3, 2018 7 minutes ago, dugsbody said: Every bit I'm not spending on the 1.6% mortgage I'm earning > 4% dividends plus capital growth in diversified ETFs. I'm all spreadsheeted up and they tell me that I'm better off extending the term and not paying off the mortgage early. I'm just playing the game in front of me. Maybe I'll get burned but I took too few risks earlier in life so I'm making up for it a little. Risk is not manageable. Equally theres no correlation between risk and reward. Quote Link to comment Share on other sites More sharing options...
dugsbody Posted June 3, 2018 Share Posted June 3, 2018 3 minutes ago, goldbug9999 said: True, getting the longest term possible just gives you more options assuming it doesn't effect the early redemption terms. Indeed. Standard 10% overpayments a year (I don't) and only a nominal small fee for redemption outside of any fix. Quote Link to comment Share on other sites More sharing options...
dugsbody Posted June 3, 2018 Share Posted June 3, 2018 1 minute ago, spyguy said: Risk is not manageable. Equally theres no correlation between risk and reward. The situation that could worry me is a global credit event causing central banks to lose control and markets to tank at the same time. In that situation it would be a terrible time to sell my shares to pay off the mortgage and I'd be eating very high rates. I'm not losing sleep over it though. I lose more sleep thinking back to missed opportunities by being too conservative when I was younger. Quote Link to comment Share on other sites More sharing options...
mrtickle Posted June 3, 2018 Share Posted June 3, 2018 46 minutes ago, dugsbody said: Indeed. Standard 10% overpayments a year (I don't) and only a nominal small fee for redemption outside of any fix. If you continue to overpay, you'll eventually reach the point where that 10% limit will crucify you. Keep it in mind when you re-mortgage. You can find yourself with the funds to overpay but sat there trapped unable to use them. Quote Link to comment Share on other sites More sharing options...
mattyboy1973 Posted June 3, 2018 Share Posted June 3, 2018 1 hour ago, dugsbody said: Every bit I'm not spending on the 1.6% mortgage I'm earning > 4% dividends plus capital growth in diversified ETFs. I'm all spreadsheeted up and they tell me that I'm better off extending the term and not paying off the mortgage early. I'm just playing the game in front of me. Maybe I'll get burned but I took too few risks earlier in life so I'm making up for it a little. In a pension or not? If not, you should probably think about doing within. Near 60% effective return off the bat due to the tax break alone and you can always pay the mortgage off with the lump sum. My feeling now in my mid 40's is that it isn't really worth saving anywhere else until the ~40k pa pension allowance is used up, only downside is if you might need the money before you hit 55. Quote Link to comment Share on other sites More sharing options...
thewig Posted June 3, 2018 Share Posted June 3, 2018 1 hour ago, spyguy said: Risk is not manageable. Equally theres no correlation between risk and reward. what do you mean? Risk is the ONLY thing you can manage imo (in trading at least) Quote Link to comment Share on other sites More sharing options...
dugsbody Posted June 4, 2018 Share Posted June 4, 2018 7 hours ago, mrtickle said: If you continue to overpay, you'll eventually reach the point where that 10% limit will crucify you. Keep it in mind when you re-mortgage. You can find yourself with the funds to overpay but sat there trapped unable to use them. I don't plan on ever over-paying, I will redeem the entire mortgage when I feel the time is right and wait for whatever current fixed period we're in to end. See below. 7 hours ago, mattyboy1973 said: In a pension or not? If not, you should probably think about doing within. Near 60% effective return off the bat due to the tax break alone and you can always pay the mortgage off with the lump sum. My feeling now in my mid 40's is that it isn't really worth saving anywhere else until the ~40k pa pension allowance is used up, only downside is if you might need the money before you hit 55. Yes, we do this too. We've enough equity outside of the pension to pay off the mortgage if we chose, but as most is inside tax efficient ISAs we choose not to. We'll pay it off completely when the time is right, to be decided. Quote Link to comment Share on other sites More sharing options...
spyguy Posted June 4, 2018 Share Posted June 4, 2018 7 hours ago, thewig said: what do you mean? Risk is the ONLY thing you can manage imo (in trading at least) I dont think people understand all risks - if you think you understand risk then you are probably looking at the wrong thing. You can diversify but thats a hedge rather than risk management. In all things investing, when people go on about taking on more risk it normally means doing dumb things in the hope of getting more money. It rarely works. Quote Link to comment Share on other sites More sharing options...
hurlerontheditch Posted June 4, 2018 Share Posted June 4, 2018 1 hour ago, spyguy said: I dont think people understand all risks - if you think you understand risk then you are probably looking at the wrong thing. You can diversify but thats a hedge rather than risk management. In all things investing, when people go on about taking on more risk it normally means doing dumb things in the hope of getting more money. It rarely works. Risk in trading (for me), is knowing what your maximum loss is before placing the trade Quote Link to comment Share on other sites More sharing options...
thewig Posted June 4, 2018 Share Posted June 4, 2018 15 minutes ago, hurlerontheditch said: Risk in trading (for me), is knowing what your maximum loss is before placing the trade its the only thing you are in control of, the amount you lose, the rest is up to the market! Quote Link to comment Share on other sites More sharing options...
spyguy Posted June 4, 2018 Share Posted June 4, 2018 The FT has a very good article T on people -hedge funds i nthis case -not grasping risk. Worth the cost of the paper. The mystery trader who roiled Wall Street https://www.ft.com/content/5e23e516-5cdc-11e8-ad91-e01af256df68 Or just read The Black Swan. People know nothing. Quote Link to comment Share on other sites More sharing options...
Riedquat Posted June 4, 2018 Share Posted June 4, 2018 1 hour ago, hurlerontheditch said: Risk in trading (for me), is knowing what your maximum loss is before placing the trade Risk includes the probability of losing it all too. The maximum loss in juggling hand grenades and crossing the road is the same (you end up dead), but the probability of the loss in the latter is that much lower that most of us accept it. Quote Link to comment Share on other sites More sharing options...
hurlerontheditch Posted June 4, 2018 Share Posted June 4, 2018 2 minutes ago, Riedquat said: Risk includes the probability of losing it all too. The maximum loss in juggling hand grenades and crossing the road is the same (you end up dead), but the probability of the loss in the latter is that much lower that most of us accept it. it does however for those who just trade company shares, you should know what you risk per trade. Assuming 1-2% of your portfolio is risked per trade. of course this does not mean you just buy 1.5% of the value of your portfolio in shares, but you risk 1.5%, which means the stop loss you are putting in is 1.5% of the value of your portfolio which will equate to a max of 20% of your portfolio size. Of course stocks can open gapping down below this stop loss, however you would not continue to hold the stock till it is worth nothing. so you will lose but you would have to have a lot of losing trades in a row to go bust. Quote Link to comment Share on other sites More sharing options...
thewig Posted June 4, 2018 Share Posted June 4, 2018 6 minutes ago, Riedquat said: Risk includes the probability of losing it all too. The maximum loss in juggling hand grenades and crossing the road is the same (you end up dead), but the probability of the loss in the latter is that much lower that most of us accept it. You can only lose what you risk though. That's why you get to control the risk, its the only thing you get to choose! Quote Link to comment Share on other sites More sharing options...
Riedquat Posted June 4, 2018 Share Posted June 4, 2018 42 minutes ago, thewig said: You can only lose what you risk though. That's why you get to control the risk, its the only thing you get to choose! Not doing anything with your money isn't completely risk-free either, so really not trading some of it so you've got something to fall back on is effectively hedging. Although I take the point. Quote Link to comment Share on other sites More sharing options...
crashmonitor Posted June 5, 2018 Share Posted June 5, 2018 On 03/06/2018 at 09:43, FabulousSophie said: PS I should clarify that the first stages of London's bust began in Q3 2015 and it is therefore virtually 3 years old there already. So by historical precedent it should now be over or almost bottoming there. The national figures are clearly highly delayed but may follow the same timeframe. Perhaps London will actually start to recover before the nationwide bust begins? Fwiw the market in N Midlands is very slow so the days of the provinces masking the crash in areas like Oxbridge and London are probably over. A bit is selling at the bottom for sure, but terrible once you get over 300k. What I really can 't understand is real crap that looks like Coronation Street asking 240k and then really good 4 bed detached cottages, on very good quiet country lanes in half an acre or so asking 400k. May be a symptom of BOMAD that crap is probably +40% noughties peak and good detached property stuck at something like 2003 prices here. Quote Link to comment Share on other sites More sharing options...
Bland Unsight Posted June 5, 2018 Share Posted June 5, 2018 On 03/06/2018 at 18:06, thewig said: does it though? haven't they just extended the average term from 25 years to 35 years? I'd argue that stretching loan terms isn't a way in which MMR has been undermined for two reasons. Firstly, mortgage terms were stretching out before MMR so it's not a response to MMR, it's just a trend that's continued before and after MMR. Secondly, MMR isn't about stopping people paying loads for houses, it's about stopping lenders from lending irresponsibly. MMR is about stopping lenders from lending money to borrowers which the borrowers will never be able to repay. Lots of UK mortgage lending practice pre-MMR wasn't rules based. A better model of it was that the key CML lenders acted as if they were a fairly loosely coordinated cartel. Take this graph from the FSA MMR data pack, published in October 2012 (hence this is as the MMR rules are being drawn up and long before the rules are brought into force in April 2014 IIRC) Source With the average first time buyer mortgage term in 2012 already being about 28 year you can see that an increasing number of mortgages with a term longer than 25 years was a trend that was well-established for first-time buyers long before MMR. There was something from the FCA on this at the end of last year Source Quote Link to comment Share on other sites More sharing options...
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