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Housing has divided the young -BBC

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BBC reporting tired assumption that those that don't own property are "have-nots" and losers.  No suggestion that buying and loading up with nose bleed levels of debt at the height of a bubble may have any potential down side...

"Rising house prices have not only left fewer young people able to buy a home, they have also divided them into property "haves" and "have-nots"."

https://www.bbc.co.uk/news/business-45084530

I love this line...

"In fact, because low interest rates make home ownership more attractive, they have probably helped keep house prices high"  - Noble prize for economics on the horizon for this expert from the Institute of Fiscal Studies.

 

 

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I was having a conversation with a member of my age cohort which turned quite hostile, the details of which are unimportant.

A question came up for me though, which I have been unable to answer on Google and I hope someone here can:

Interest-only mortgages require a repayment vehicle at the end of the mortgage, but is it possible to have a repayment mortgage where there is still a lump sum to pay at the end of the term? Is this something which is ever set up from the outset, or could it occur through higher interest rates and/or underpayment?

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6 minutes ago, Locke said:

I was having a conversation with a member of my age cohort which turned quite hostile, the details of which are unimportant.

A question came up for me though, which I have been unable to answer on Google and I hope someone here can:

Interest-only mortgages require a repayment vehicle at the end of the mortgage, but is it possible to have a repayment mortgage where there is still a lump sum to pay at the end of the term? Is this something which is ever set up from the outset, or could it occur through higher interest rates and/or underpayment?

As far as I'm aware a straight repayment is exactly that. If interest rates change then your monthly payments are re calculated (unless on a fix).

There was the old 'endowment' mortgages which I believe were essentially interest only mortgages with a separate payment which was supposed to cover the capital; who the f@ck thought of that one I do not know.

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39 minutes ago, Locke said:

is it possible to have a repayment mortgage where there is still a lump sum to pay at the end of the term? 

Endowment Mortgage.

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33 minutes ago, Sperm Donor said:

As far as I'm aware a straight repayment is exactly that. If interest rates change then your monthly payments are re calculated (unless on a fix).

There was the old 'endowment' mortgages which I believe were essentially interest only mortgages with a separate payment which was supposed to cover the capital; who the f@ck thought of that one I do not know.

 

5 minutes ago, Errol said:

Endowment Mortgage.

Yeah, probably where I got the idea from. Cheers!

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https://www.ifs.org.uk/people/profile/531?year_published[start]=&year_published[end]=&page=2

Jonathon Cribb’s bio is there. Education- Cambridge twice then to the IFS (assumption is he is ‘young’ . No idea if he is in the ‘haves’  ?

His other work looks more interesting to read (in his listed specialisms) but I don’t like the BBC article. But to be fair this is probably what the BBC team requested ! 

“About this piece

This analysis piece was commissioned by the BBC from an expert working for an outside organisation.”

 

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Of course housing has divided the young.

Those that will inherit, to those who have to pay for over-priced rubbish on their own tick.

The present government have no interest in providing affordable housing to the young. It would destroy the interests of their core electorate.

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6 hours ago, NuBrit said:

Of course housing has divided the young.

Those that will inherit, to those who have to pay for over-priced rubbish on their own tick.

The present government have no interest in providing affordable housing to the young. It would destroy the interests of their core electorate.

But I think the penny is finally beginning to drop - I.e. that their diehard core electorate will not necessarily be enough to get them re elected, so they'll need policies to attract enough floating voters, and in particular the priced out younger cohort. 

Whether they'll have the wit/ sense to come up with anything effective, I.e. not more on the lines of Help to Buy (Help to Swell Builders' Fat Bonuses) is another matter.  

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On 17/08/2018 at 14:56, Errol said:

Endowment Mortgage.

It was just an Interest only mortgage, endowment most popular way of providing for payment but also acceptable was pension lump sum, selling the house, inheritance etc

The two were parallel but not linked as such 

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15 hours ago, NuBrit said:

Of course housing has divided the young.

Those that will inherit, to those who have to pay for over-priced rubbish on their own tick.

The present government have no interest in providing affordable housing to the young. It would destroy the interests of their core electorate.

Not just the young the whole country.  If someone in my road who is in their 50s were to divorce the cost of buying a new home for both couples has shot up compared to the 90s.  It makes problems like divorce etc far worse.

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10 hours ago, Mrs Bear said:

But I think the penny is finally beginning to drop - I.e. that their diehard core electorate will not necessarily be enough to get them re elected, so they'll need policies to attract enough floating voters, and in particular the priced out younger cohort. 

Whether they'll have the wit/ sense to come up with anything effective, I.e. not more on the lines of Help to Buy (Help to Swell Builders' Fat Bonuses) is another matter.  

The Tories have a choice to make. Either house prices can be 10x wages as at present, or they can be a price which the median household can afford. They can't be both.

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1 hour ago, Dorkins said:

The Tories have a choice to make. Either house prices can be 10x wages as at present, or they can be a price which the median household can afford. They can't be both.

+1

Of course if they fall to a reasonable level then they lose much of their core vote.

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34 minutes ago, Si1 said:

+1

Of course if they fall to a reasonable level then they lose much of their core vote.

I'm not so sure. Where would that core vote go? UKIP? Stop voting? Tories need to decide whether they would prefer to lose a 65 year old to UKIP for life or a 35 year old to Labour for life. Pretty obvious which one is the correct decision in the long term.

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1 minute ago, Dorkins said:

I'm not so sure. Where would that core vote go? UKIP? Stop voting? Tories need to decide whether they would prefer to lose a 65 year old to UKIP for life or a 35 year old to Labour for life. Pretty obvious which one is the correct decision in the long term.

I agree with you what the obvious long term direction should be. But the core vote has a direct influence on internal Tory party workings, just like the core public sector union vote did on Gordon Brown's never ending debt fest, via internal party control.

The rank and file tory membership, average age about 78, will prevent sensible long term policies gaining traction. It will be the same kind of electoral suicide endured by Gordon Brown in 2010 and they will be in utter denial even for years afterwards. They will need several utter electoral spankings to come to their senses, as a party. The 2027 Tory party general election leader will be a call-me-dave inherited wealth mini-me who sucks up to housing wealth.

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1 hour ago, Si1 said:

I agree with you what the obvious long term direction should be. But the core vote has a direct influence on internal Tory party workings, just like the core public sector union vote did on Gordon Brown's never ending debt fest, via internal party control.

The rank and file tory membership, average age about 78, will prevent sensible long term policies gaining traction. It will be the same kind of electoral suicide endured by Gordon Brown in 2010 and they will be in utter denial even for years afterwards. They will need several utter electoral spankings to come to their senses, as a party. The 2027 Tory party general election leader will be a call-me-dave inherited wealth mini-me who sucks up to housing wealth.

Maybe. The Conservative party constitution means that members are pretty weak though. Conferences are heavily controlled by the central party, the "A list" system lets the central party force its preferred candidates onto constituencies, and MPs can prevent party members from choosing the leader by agreeing on one before it goes out to a vote (as happened with May). Wealthy donors mean the party isn't financially dependent on membership fees.

You're right though, the Tory party might choose to die out with its current members/core vote by slavishly sticking to its strategy of protecting existing wealth. That would leave a wide open niche on the centre-right for a new party in favour of free trade and lower taxes on income, a bit like the German FDP.

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7 hours ago, Dorkins said:

Maybe. The Conservative party constitution means that members are pretty weak though. Conferences are heavily controlled by the central party, the "A list" system lets the central party force its preferred candidates onto constituencies, and MPs can prevent party members from choosing the leader by agreeing on one before it goes out to a vote (as happened with May). Wealthy donors mean the party isn't financially dependent on membership fees.

You're right though, the Tory party might choose to die out with its current members/core vote by slavishly sticking to its strategy of protecting existing wealth. That would leave a wide open niche on the centre-right for a new party in favour of free trade and lower taxes on income, a bit like the German FDP.

Ah, I didn't realise that about the Tories, constitutionally.

Secondly, the Libdems would appear to be appropriately positioned if the Tories don't shift. They are the party of Gladstone after all. My only problem is they are remainers, but I know plenty of good people like that so it's not fatal.

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30 minutes ago, Si1 said:

Ah, I didn't realise that about the Tories, constitutionally.

Secondly, the Libdems would appear to be appropriately positioned if the Tories don't shift. They are the party of Gladstone after all. My only problem is they are remainers, but I know plenty of good people like that so it's not fatal.

No.

Libdems are the party of David Owen and Steele.

A bunch of knowbetter vain idiots.

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On 15/08/2018 at 13:00, Wayward said:

BBC reporting tired assumption that those that don't own property are "have-nots" and losers.  No suggestion that buying and loading up with nose bleed levels of debt at the height of a bubble may have any potential down side...

"Rising house prices have not only left fewer young people able to buy a home, they have also divided them into property "haves" and "have-nots"."

https://www.bbc.co.uk/news/business-45084530

I love this line...

"In fact, because low interest rates make home ownership more attractive, they have probably helped keep house prices high"  - Noble prize for economics on the horizon for this expert from the Institute of Fiscal Studies.

This is a by in large a UK centric problem.

Nothing wrong with a lifetime of renting in most modern economies.

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14 hours ago, Dorkins said:

I'm not so sure. Where would that core vote go? UKIP? Stop voting? Tories need to decide whether they would prefer to lose a 65 year old to UKIP for life or a 35 year old to Labour for life. Pretty obvious which one is the correct decision in the long term.

I agree although I think they are haunted by 97 and the drop in prices then.  Sadly HPI has been a vote winner in the past and people often think what happened in the price is going to be repeated (not always true though).

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15 hours ago, Dorkins said:

I'm not so sure. Where would that core vote go? UKIP? Stop voting? Tories need to decide whether they would prefer to lose a 65 year old to UKIP for life or a 35 year old to Labour for life. Pretty obvious which one is the correct decision in the long term.

I think on the most part folks don't change their minds...they die off.  IMO the change from communism to effective capitalism in the east didn't happen because folks changed their minds - the old communists died off.

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15 minutes ago, Wayward said:

I think on the most part folks don't change their minds...they die off.  IMO the change from communism to effective capitalism in the east didn't happen because folks changed their minds - the old communists died off.

I recently read an obituary for the French-Egyptian Marxist intellectual Samir Amin, congratulating him fulsomely for anticipating the present economic crisis via Marx's Theory of Value in 1978, or some such. Wildly improbable but not without a kernel of sense, for me Marx was the last great classical economist. But Amin's prior existence as a Soviet-era Communist and then Maoist fellow-traveler was largely glossed over. The Germans even gave the bum a freedom of speech award in 2009; a sometime apologist for the genoicide of 100 million people! Who says they don't have a sense of humour?

 

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The tories obviously need their core vote, older people with property wealth, to get towards electoral victory. If policies like the so called "dementia tax" puts them off turning out, they know they cant win. The floating voter they seek isnt the young person on minimum wage on a zero hours contract, corbyn has them. It is someone in the midlands, with a help to buy newbuild, who has the trappings of a middle class aspirational lifestyle, but one that can only be kept going by low interest rate debt, a car on tick, and tax credits. So basically, i doubt conscious, deliberate political action will sort out the housing crisis. 

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8 hours ago, cashinmattress said:

This is a by in large a UK centric problem.

Nothing wrong with a lifetime of renting in most modern economies.

Mostly depends on the price. Lifetime housing spend 5 years' gross career average income per adult, okay. >10 years, you're poor.

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  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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