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House Prices Static/stangant/falling For The Next 20 Years +?

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If these suppliers of mortgages (due in the main to their connections, political and otherwise) are that sure of the stable future in terms of rates that they can offer such deals, then they must be fairly sure that the whole economy will be flat for the same period of time. Now if we are looking at perhaps 10 years for the property market to bottom out and a further 10 to recover in some way, then is it safe to assume that no spike in values will be seen for 20+years?

http://www.housepricecrash.co.uk/forum/ind...showtopic=23791

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If these suppliers of mortgages (due in the main to their connections, political and otherwise) are that sure of the stable future in terms of rates that they can offer such deals, then they must be fairly sure that the whole economy will be flat for the same period of time. Now if we are looking at perhaps 10 years for the property market to bottom out and a further 10 to recover in some way, then is it safe to assume that no spike in values will be seen for 20+years?

http://www.housepricecrash.co.uk/forum/ind...showtopic=23791

A lot of people are going to grab that 10 year fixed rate deal and buy a house.

Houses ARE cheap(ish) in terms of monthly payments if you get 10 years fixed at less than 4.8% IR.

Buy with a repayment loan and your £130k debt will shrink to around £95k in 10 years.

This will provide a buffer against higher rates in 10 years. You could even remortgage the £95k in 10yrs if rates went through the roof.

...it's a tempting deal to couples looking to get on the ladder...

(No point throwing all the rent is cheaper than buying arguments at me. I've heard them all before. You are up against the mindset of the buying masses here, not me)

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A lot of people are going to grab that 10 year fixed rate deal and buy a house.

Houses ARE cheap(ish) in terms of monthly payments if you get 10 years fixed at less than 4.8% IR.

Buy with a repayment loan and your £130k debt will shrink to around £95k in 10 years.

This will provide a buffer against higher rates in 10 years. You could even remortgage the £95k in 10yrs if rates went through the roof.

...it's a tempting deal to couples looking to get on the ladder...

(No point throwing all the rent is cheaper than buying arguments at me. I've heard them all before. You are up against the mindset of the buying masses here, not me)

Are there nasty catched in these 10 year deals? Big fees?

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There are no catches that I can see - the Woolwich, Yorkshire and West Brom deals are all very similar

These mortgages could prevent or delay a HPC significantly :unsure:

I think they could at least prop up the market for a good while longer.

With this kind of deal a couple can buy today and as long as they can afford the (static) repayments then they will be OK.

If these amazing deals hang around for a while then that BURIES one of the main bear arguments for a HPC.

i.e. the worry about the crippling effects of near term higher interest rates on potential FTBs.

I'm surprised (NOT!) that the permabears are a bit quiet on this one...

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I think they could at least prop up the market for a good while longer.

With this kind of deal a couple can buy today and as long as they can afford the (static) repayments then they will be OK.

If these amazing deals hang around for a while then that BURIES one of the main bear arguments for a HPC.

i.e. the worry about the crippling effects of near term higher interest rates on potential FTBs.

I'm surprised (NOT!) that the permabears are a bit quiet on this one...

If these are catch-free then hopefully I can bag one of these beauties in a year's time.

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There are no catches that I can see - the Woolwich, Yorkshire and West Brom deals are all very similar

These mortgages could prevent or delay a HPC significantly :unsure:

What about if you have to end the mortgage within the time? Big big fees to pay I'm afraid!!!

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Also, I wonder if you can overpay in these mortage deals?

Prob not...

Hi,

It is an interesting tactic, I wonder what is the underlying factor in the offer, from their perspective? The one thing that comes to mind is the plethora of limited, fixed deals 1-5 years around 2000-2001. Not long after that, interest rates tumbled quite a bit (you would have made significant savings if you had been on a variable rate. The lenders made quite a profit on all those fixed deals). Such a move isn't made without some benefit to the lender. And the lending market is not far removed from a cartel on the broader perspective, they nearly never make individually, competitve moves, it usually seems to be a collective move by smaller or niche lenders against the bigger players. The markets aren't really pricing in rate cuts in the forseeable future, so that is puzzling then. I think we need to dig deeper into "what's in for me" perspective from the point of view of these group of lenders and work back from there to guestimate exactly what is the basis of their longer term hunches, inside knowledge, etc. The larger lenders often seem to hold back from new financial products in advance of the smaller lenders. I shall do a bit of digging myself over the next week I think - it is certainly an interesting development in terms of future guesses-directions of the economy.

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Guest Winners and Losers

Somewhere I say an analysis, can't remember over what time period but was fairly signifcant, stating that you would have saved more money having a variable rate over the time period than fixed. Glad I had variable. I didnt want to fix (back in 96 and endowment sounded dodgy to me, even then when it was being spun to the max). Looked like I was right to be cautious on that one.

Hi,

It is an interesting tactic, I wonder what is the underlying factor in the offer, from their perspective? The one thing that comes to mind is the plethora of limited, fixed deals 1-5 years around 2000-2001. Not long after that, interest rates tumbled quite a bit (you would have made significant savings if you had been on a variable rate. The lenders made quite a profit on all those fixed deals). Such a move isn't made without some benefit to the lender. And the lending market is not far removed from a cartel on the broader perspective, they nearly never make individually, competitve moves, it usually seems to be a collective move by smaller or niche lenders against the bigger players. The markets aren't really pricing in rate cuts in the forseeable future, so that is puzzling then. I think we need to dig deeper into "what's in for me" perspective from the point of view of these group of lenders and work back from there to guestimate exactly what is the basis of their longer term hunches, inside knowledge, etc. The larger lenders often seem to hold back from new financial products in advance of the smaller lenders. I shall do a bit of digging myself over the next week I think - it is certainly an interesting development in terms of future guesses-directions of the economy.

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Also, I wonder if you can overpay in these mortage deals?

Prob not...

You can usually overpay up to 10% a year without penalty. It varies from lender to lender.

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The Yorkshire mortgage allows you to overpay by up to 10% per year, so you could pay the whole thing off inside the 10 year 4.69% rate.

Sounds like quite a generous deal, especially if you don't believe the 'official' rate of inflation of 2%. If inflation is as high as 4% as many suspect, then this type of deal looks even better.

:blink:

Edited by tonification

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Thinking about this has me concerned.

There are two choices as far as I see it. You could...

A. Not buy. Wait for the HPC and the inevitable rise in interest rates following this. Then buy a cheaper property, but with an expensive mortgage at 6% or 7%.

B. Buy now at the top of the market, but at 4.69%. Watch the HPC, but see the interest rates rise. Make the same mortgage payments as option A in £££'s terms.

So theres no point waiting for a HPC?

:blink:

Edited by tonification

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Reason why they can offer these deals is because long term interest rates are really really low - like a 50 yr or so low. The base rate isn't the driving factor here. The banks could issue (prolly indirectly via derivatives) 10 yr bonds as a hedge. Everyone's a winner..

.. except HPC. Yes this is worrying me too, its not good.

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Thinking about this has me concerned.

There are two choices as far as I see it. You could...

A. Not buy. Wait for the HPC and the inevitable rise in interest rates following this. Then buy a cheaper property, but with an expensive mortgage at 6% or 7%.

B. Buy now at the top of the market, but at 4.69%. Watch the HPC, but see the interest rates rise. Make the same mortage payments as option A in £££'s terms.

So theres no point waiting for a HPC?

:blink:

I dont think I can wait for the HPC. I just dont think I want to. Definitely waiting another year but this time next year I will be concentrating my energies on buying somewhere.

So long as my repayments are similar to my current rent (ie. I can still save enough to maximise my isa options for cash and shares and have a bit left over then I will buy.

Its a complicated business this decision making malrkey.

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Thinking about this has me concerned.

There are two choices as far as I see it. You could...

A. Not buy. Wait for the HPC and the inevitable rise in interest rates following this. Then buy a cheaper property, but with an expensive mortgage at 6% or 7%.

B. Buy now at the top of the market, but at 4.69%. Watch the HPC, but see the interest rates rise. Make the same mortage payments as option A in £££'s terms.

So theres no point waiting for a HPC?

:blink:

Ah but, in scenario 'A' you have a lower debt, therefore if rates eventually drop at some stage, your repayments will drop. With option 'B' in 10 years if IRs are horrendous then your repayments will go up (or you may have to extend the mortgage term to cope).

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Ah but, in scenario 'A' you have a lower debt, therefore if rates eventually drop at some stage, your repayments will drop. With option 'B' in 10 years if IRs are horrendous then your repayments will go up (or you may have to extend the mortgage term to cope).

course for horses...if in scenario b you also overpay and/or invest spare money wisely then it looks like a good option to me.

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Thinking about this has me concerned.

There are two choices as far as I see it. You could...

A. Not buy. Wait for the HPC and the inevitable rise in interest rates following this. Then buy a cheaper property, but with an expensive mortgage at 6% or 7%.

B. Buy now at the top of the market, but at 4.69%. Watch the HPC, but see the interest rates rise. Make the same mortage payments as option A in £££'s terms.

So theres no point waiting for a HPC?

:blink:

I was going to post exactly the same thoughts.

I usually get slated for posting anything like that though!

A lot of 'thinking' people would choose option A as it is better to have a smaller loan at a higher rate.

It makes overpaying far more effective on a repayment loan as you only pay interest on what you owe.

i.e. the debt shrinks faster if you overpay in option A compared to B. (obvious really!)

However, I think many will choose option B.

If these deals become the norm then I really don't see a 'crash' in prices unless something 'nasty' happens beyond the economy to do with war/terroism etc.

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Ah but, in scenario 'A' you have a lower debt, therefore if rates eventually drop at some stage, your repayments will drop. With option 'B' in 10 years if IRs are horrendous then your repayments will go up (or you may have to extend the mortgage term to cope).

You can overpay by 10% per year, so you could have it all paid before the rate rises after 10 years. Even if you don't, the sum by then will be quite small.

With Option A you have to factor in the costs of renting too.

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Now I can remember a certain Chancellor of this Parish making a speech somewhere some, oh was it two or three years ago, in which he said he would like to see more longer term fixed rate mortgages.

Mr Cynic alongside me wonders if "pressure" has been brought to bear.

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Now I can remember a certain Chancellor of this Parish making a speech somewhere some, oh was it two or three years ago, in which he said he would like to see more longer term fixed rate mortgages.

Mr Cynic alongside me wonders if "pressure" has been brought to bear.

Hi,

I don't think that is cynical at all. In the 2003 budget Gordy devoted a lengthy section to exploring a move towards Americain and European, fixed rate mortgages. The thing is, quite a few building socities and banks have had a stab at it before but always withdrawn after a while because British personal finance markets are very dynamic (I think more in the Enron sense of the word) so that mortgages are switched very easily to different lender incentives, derivative base or even foreign financing. So without heavy penalities, the lenders have found it a costly venture and with heavy penalities, they have been even less likely to attract punters. I remember around that budget report the Council of Mortgage Lenders had complied a fairly lengthy synopsis, as well as BoE. The CML were quite negative about it. Soooo, maybe Gordy is dangling a carrot in the background to kick start a fixed rate mortgage market. Although the cycnic in me still thinks there has to be something more in it for the banks in terms of internal, future rate and economic predictions. Unless they are thinking in terms of future deflation in the wider economy and house prices. In which case, could make sense. Problem being, the UK is on the alert for inflation in many ways though, the very opposite. Fixing yourself at historically low rates woould be a really bad move in that case (for the bank, even if they have issued bonds to cover it). I do hope my tax pounds are not going to fund speculative bank property-lending-indemintees for Gordon 'fanny mae' Brown. Humm, bit more digging ahead I think.

Edited by boom_and_bust

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If this thread was compiled as a focus group statement, for the providers of the long term mortgage, they would know they got it (the product/mortgage design) spot on.

So the implication or suspiscion is, a lending mechanism to bolster or at least stabilise house prices?

That being convenient for some of the "players".

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If this thread was compiled as a focus group statement, for the providers of the long term mortgage, they would know they got it (the product/mortgage design) spot on.

Yes, especially when you consider the thread is on HPC and how quiet the bears are on this thread.

4.7% Fixed rate mortgage for TEN YEARS.

You can overpay by 10% per year, so you could have it all paid before the rate rises after 10 years. Even if you don't, the sum by then will be quite small.

Are you sure?

The 10% overpayment option is of limited benefit.

I overpaid my mortgage by much larger sums than 10% and it still took 7 years to pay it off.

At a guess you will still owe over 70% of the original debt after 10 years without overpayment.

If you overpay 10% i guess you will owe just over 60%. Anyone going to do the sums?

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  • 301 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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