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House prices completely out of 'kilter' with earnings


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“But we had to struggle with double digit interest rates!”

I had this argument at work the other day with a boomer, and slapped it down with maths. 

Basically, those double digit rates meant you could overpay your mortgage way, way faster as your earnings increased, and could easily end up paying 1/2 the total sum of you would today.

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I had this argument at work the other day with a boomer, and slapped it down with maths. 

Basically, those double digit rates meant you could overpay your mortgage way, way faster as your earnings increased, and could easily end up paying 1/2 the total sum of you would today.

I think you should of slapped down the boomer but don’t get your workings - high interest is high interest and restricts the amount available for capital repayment 

The reason you could pay down quick was the capital sum was lower and earnings were increasing 

You can only over pay the capital bit 

The sums work because 10% on £60k is far easier to pay down quick than 2% on £350k

Buts it not because of the interest rate 

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I had this argument at work the other day with a boomer, and slapped it down with maths. 

Basically, those double digit rates meant you could overpay your mortgage way, way faster as your earnings increased, and could easily end up paying 1/2 the total sum of you would today.

Not sure why people have to approach everything as an argument and feel the need to puff themselves up by going around slapping people down, what a sad state of affairs

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I had this argument at work the other day with a boomer, and slapped it down with maths. 

Basically, those double digit rates meant you could overpay your mortgage way, way faster as your earnings increased, and could easily end up paying 1/2 the total sum of you would today.

To put it as a one liner to mr/mrs/ms/alien/(still in work?) boomer: “So basically inflation eroded the value of your debt, increased your earnings, homes value AND your pension”  

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I think you should of slapped down the boomer but don’t get your workings - high interest is high interest and restricts the amount available for capital repayment 

The reason you could pay down quick was the capital sum was lower and earnings were increasing 

You can only over pay the capital bit 

The sums work because 10% on £60k is far easier to pay down quick than 2% on £350k

Buts it not because of the interest rate 

I wrote here an abridged version without clarity, but yes that's basically what I said (that a lower principal is preferable). Apologies.

Edited by Frugal Git
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Not sure why people have to approach everything as an argument and feel the need to puff themselves up by going around slapping people down, what a sad state of affairs

They were moaning about current low savings rates, and in the same sentence mentioned their 15% mortgage. 

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I think you should of slapped down the boomer but don’t get your workings - high interest is high interest and restricts the amount available for capital repayment 

The reason you could pay down quick was the capital sum was lower and earnings were increasing 

You can only over pay the capital bit 

The sums work because 10% on £60k is far easier to pay down quick than 2% on £350k

Buts it not because of the interest rate 

Mine was interest only and I remember those days well. Rates fluctuated wildly and hardly a month went by without a letter from the bank asking me to change my mortgage standing order. I actioned the requests to increase the payments and ignored the ones to reduce them. As a result, mortgage done and dusted in under 15 years and I was able to cash-in the life insurance policy linked to it before that went south.

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high interest is high interest and restricts the amount available for capital repayment 

It also restricts the credit available for lending, which directly influences house prices.

High interest rate environments favour savers and the most efficient (i.e. least frivolous) people. 

Low interest rates favour borrowers and the least efficient people.

The former means that people like us who produce and save have their own homes, while debtslvaes are rentingforever.

In the latter case, debtslaves get their homes, while savers are rentingforever.

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They were moaning about current low savings rates, and in the same sentence mentioned their 15% mortgage. 

Maybe consider being alive then was not as easy as now in other ways.  Certainly many peoples parents are boomers and the high interest ment no food on the table some months.  

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Interesting, the 1990s was possibly the best ever time to buy a house but if this forum had existed it'd be telling everyone to wait for further falls.

1996 was the best time to buy. Housing probably represented the best value it ever has.

I bought in 1989 at the peak - sold at a loss, rented for a while and bought in 1996, London 4 bed semi for 101K, yes £101k. Sold that and bought again, sold that in 2003, rented for way too long believing that the fundamentals where bad (and they were). Bought in 2010 because I believed that the gov would do anything to prop up the market, especially after the GFC, and they have, so far.

I like many others, I want house prices to fall, even tho I own a house, simply because it is not good for our children and younger folk.

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1996 was the best time to buy. Housing probably represented the best value it ever has.

I bought in 1989 at the peak - sold at a loss, rented for a while and bought in 1996, London 4 bed semi for 101K, yes £101k. Sold that and bought again, sold that in 2003, rented for way too long believing that the fundamentals where bad (and they were). Bought in 2010 because I believed that the gov would do anything to prop up the market, especially after the GFC, and they have, so far.

I like many others, I want house prices to fall, even tho I own a house, simply because it is not good for our children and younger folk.

What part of London?

Stab in the dark - Chessington?

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Maybe consider being alive then was not as easy as now in other ways.  Certainly many peoples parents are boomers and the high interest ment no food on the table some months.  

I think this is true for some, but rubbish for most. We are talking about the early 90s. My parents were war baby/boomers - late to the game as they were immigrants. One slightly above avg income coming in. 

From that we wanted for absolutely nothing, and somehow they managed to save and pay of their mortgage in 7 years.

the chap I was talking to was earning good money as a programmer at that time. I doubt he was one of those without a pot to p1ss in, yet here he was moaning about how the zirp environment was punishing him, and in the same breath bemoaning high rates.

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What we need is some more government help! Maybe a scheme where you can get a 100% mortgage, and then the government can give you 25% on top for debt consolidation, a new car, and maybe a few holidays next year as a morale booster.

And most inportantly, it will help improve house prices nationwide. Win/win for everyone.

...but seriously, the funny (and very, very sad) thing is, this is what some people actually would welcome.

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I think this is true for some, but rubbish for most. We are talking about the early 90s. My parents were war baby/boomers - late to the game as they were immigrants. One slightly above avg income coming in. 

From that we wanted for absolutely nothing, and somehow they managed to save and pay of their mortgage in 7 years.

the chap I was talking to was earning good money as a programmer at that time. I doubt he was one of those without a pot to p1ss in, yet here he was moaning about how the zirp environment was punishing him, and in the same breath bemoaning high rates.

Im surprised he bothers with you, sounds like your a bit judgemental 

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What we need is some more government help! Maybe a scheme where you can get a 100% mortgage, and then the government can give you 25% on top for debt consolidation, a new car, and maybe a few holidays next year as a morale booster.

I totally understand the rhetoric about younger generations splashing money on cars, holidays, Gucci etc to feel value in something.. It is to an extent true and is very difficult to find like minded people.. Most are about the 'sesh' though and this I can guarantee, even people from well off families.. In reality, this has continued into 30s for a fair proportion and then by that time unless you're on 50k+ and have a stringent saving mentality.. Pick 2; marriage, kids, house or retirement. 

Not bashing boomers as I can understand what they see.. But they've encouraged it as well.. Your kids. 

Edited by Money Frugality
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I think you should of slapped down the boomer but don’t get your workings - high interest is high interest and restricts the amount available for capital repayment 

The reason you could pay down quick was the capital sum was lower and earnings were increasing 

You can only over pay the capital bit 

The sums work because 10% on £60k is far easier to pay down quick than 2% on £350k

Buts it not because of the interest rate 

Yes it was because the interest rate was the reason the house was £60k and not £350k.

 

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  • 439 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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