Interest Rates on the way up

[Speed1987]

On 8/27/2021 at 12:29 PM, Unmoderated said:

Haha, it is possible but I was mid thirties and a super saver. I graduated with my student loan in my ISA (worked to fund uni and lived at home to save rent). Didn't do a gap-yah and all the other wanky stuff. No new cars, nothing on finance, not even a phone. Only debt is the mortgage. 

Arguably others have had far more fun 'living for today' but I'm (finally) about to start the next step of my plan which is to renovate, extend, flip and repeat. Tax free gains to buy my house so I don't pay a penny as it were. 

Just an average guy trying to be smart and beat the system. 

That's my evil plan also, just finishing the renovation on my property now. It's been 5 years, but my equity has increased significantly and I should get the highest price on the street.

I should see a return of double the purchase price, 👌.

 

[Money Frugality]

2 hours ago, Twenty Something said:

But most of the wealth is in the top 20% of the population. Most people are not going to be handing down any significant inheritance. I’m assuming you are inferring that the boomers are going to spread their wealth far and wide to the younger generation? Great if your boomer parents are in the top 20, maybe 30% of the country for wealth, not so great if they are in the other 70-80%. 
 

What will happen is that the gap between the property haves and have nots will further widen. I suppose whether all this meets your definition of middle class is your subjective opinion. What is middle class to you? Is it an education thing? A wealth thing? A how you hold your knife and fork think? 
 

 

Thanks for the informative insight.. The graph puts it into perspective a lot better as well.. 

I'd put middle class as a 9 on the scale IMO, as goes the saying 'cant break out of the middle class'.. The biggest gap between bands would denote where middle class is from a financial perspective; irrespective of any kind of manor of conducting oneself. 

[Money Frugality]

On 27/08/2021 at 12:29, Unmoderated said:

Haha, it is possible but I was mid thirties and a super saver. I graduated with my student loan in my ISA (worked to fund uni and lived at home to save rent). Didn't do a gap-yah and all the other wanky stuff. No new cars, nothing on finance, not even a phone. Only debt is the mortgage. 

Arguably others have had far more fun 'living for today' but I'm (finally) about to start the next step of my plan which is to renovate, extend, flip and repeat. Tax free gains to buy my house so I don't pay a penny as it were. 

Just an average guy trying to be smart and beat the system. 

Can I question you on this... I've recently undergone a similar thing with my house and was surprised to find it has almost doubled in value in five years.. What kind of returns from renovating per house are you even expecting in this current climate and future etc assuming all unspecialised work is done by yourself.. Wont associated moving costs eat into that significantly the higher up you go..? 

 

Its always put me off because if I were buying a house seeing it had been bought a year before and on for 50-100k more id give it the swerve unless it was fairly new..

[Unmoderated]

2 hours ago, Speed1987 said:

That's my evil plan also, just finishing the renovation on my property now. It's been 5 years, but my equity has increased significantly and I should get the highest price on the street.

I should see a return of double the purchase price, 👌.

 

Great work! I too would see similar but always worth bearing in mind what the house is worth immediately before you start the work, what it'll cost, and what it's likely worth afterward. In rough numbers house worth low 500s today, work quotes coming in at 200 and final value mid 800s - poss 900.

However, locking in a 5yr fixed rate means I might be living in it a while and enjoying it first before moving onto the next one. 

[Unmoderated]

1 hour ago, Money Frugality said:

Can I question you on this... I've recently undergone a similar thing with my house and was surprised to find it has almost doubled in value in five years.. What kind of returns from renovating per house are you even expecting in this current climate and future etc assuming all unspecialised work is done by yourself.. Wont associated moving costs eat into that significantly the higher up you go..? 

 

Its always put me off because if I were buying a house seeing it had been bought a year before and on for 50-100k more id give it the swerve unless it was fairly new..

Yeah no problem. My expectation is a fairly simple one and that's to generate about £1.50-£2 back for each £1 I spend on the refurb. The more I do myself the closer to £2 we go. 

Moving costs would be significant if I sold at say £900K and bought at £900k but I'd want to buy something much cheaper, possibly cash at auction and then renovate that. If I can sell at £900K once all is done I'll have £500K equity after disposal (from a £75K deposit four years ago!).

For the me the price rise is less relevant than the relative price rise. No point moving house if they've all gone up by the same amount. In the mid 2000s you saw people thinking they were property gurus because they'd spent £50K adding £40K of value to the house only for the market to have saved their arses. 

End goal is an eco house that's comfortable and a nice but modest size on a nice plot near an ok town. Then I can retire early, drive around in a camper van and tend to my garden. If I get super lucky I'll have a canal mooring and my own narrow boat. 

[Twenty Something]

1 hour ago, Money Frugality said:

Thanks for the informative insight.. The graph puts it into perspective a lot better as well.. 

I'd put middle class as a 9 on the scale IMO, as goes the saying 'cant break out of the middle class'.. The biggest gap between bands would denote where middle class is from a financial perspective; irrespective of any kind of manor of conducting oneself. 

It’s an interesting thought in terms of what defines class. Does an illiterate school drop out attain middle class status if he wins 200k on a scratch card, or is culture / education (or lack there of) the real marker? Taking a purely financial view, I guess you’d need to define at what level creates the middle class lifestyle of a house, holidays a couple of times a year and a dog named Bertie. To that extent, I’d probably agree with you that the 9th decile affords that lifestyle with the 8th probably largely joining in too. Much below that and you have the working class who are increasingly struggling financially as you head down the chart to the bottom. However, if I lost my comfortable middle class lifestyle tomorrow, culturally I would still see myself as part of that group even if I now couldn’t rub shoulders with them. 

[Flat Bear]

On 30/08/2021 at 23:27, Twenty Something said:

Spot on reply in my view, and what I have been posting on other threads. The end of the stamp duty holiday and the end of furlough will both pass without a whimper. Wage inflation is the concern, and reports such as the lorry drivers who are earning £60k per year will filter through into the price of your bread on the shelf. So, things inflate away, and those who hold assets such as gold, houses, bitcoin and the such will win. Those who hold savings in their fiat currency will lose. Eventually the deck of cards will fall over, but I don't believe we are going to see that short to mid term (read 5 - 10 years). There is a way for this to run yet with the return to normality, the resumption of holidays, nights out, discretionary spending and the such driving a boom over the next few years. Meanwhile my mortgage debt deflates away with every yearly pay rise, and while it may not create as good a return as bitcoin, I'm certain buying a house isn't going to be something I live to regret. As with all of history, the rich will get richer, the middle classes will get a bit of a backhander, and the poorer ends of society will by and large remain stuck where they are. The very function of the ruling classes whether right or left wing is to maintain the status quo, and betting against them will get you nowhere. 

Thank you Twenty Something

I note you have been a member since 2005 so it is probably Forty Something now

I agree with you and do not think you are doing, or have done, the wrong thing at all. The only other real option you had was to rent which is not a very good option at this time in this country. As you say slowly but surely your mortgage will deflate nominally and with inflation growing it will get eroded in real terms as well. You also have the certainty and security that owning a property brings.

Purely as an "investment", as some people still see houses, I do not see it as the best option. If, I am not by the way, I was a BTL landlord with a larger portfolio I would be looking to off load them all as quickly as I could. There are a few reasons, with interest rate rises albeit relatively small to begin with on the horizon, with the new tax regulations and other new regulations government is apply and the likely tax on wealth as opposed to earnings we are likely to see over the next decade there is very little upside for owning property purely as an investment.

I have personally noticed more sales online from BTLers at this time, although I do not look very often. I do not see this being a reason for prices to fall at all but just an observation.

[dances with sheeple]

On 31/08/2021 at 13:55, Twenty Something said:

It’s an interesting thought in terms of what defines class. Does an illiterate school drop out attain middle class status if he wins 200k on a scratch card, or is culture / education (or lack there of) the real marker? Taking a purely financial view, I guess you’d need to define at what level creates the middle class lifestyle of a house, holidays a couple of times a year and a dog named Bertie. To that extent, I’d probably agree with you that the 9th decile affords that lifestyle with the 8th probably largely joining in too. Much below that and you have the working class who are increasingly struggling financially as you head down the chart to the bottom. However, if I lost my comfortable middle class lifestyle tomorrow, culturally I would still see myself as part of that group even if I now couldn’t rub shoulders with them. 

Someone with 200k in their pocket is way ahead of the average person who thinks they are "middle class", most of that group are relying on debt and the housing bubble staying intact for their status and lifestyle IMO. There will be plenty of people who know how to milk the benefits system with far more cash flow than some "middle class" couple eating beans to pay the big mortgage.

[dances with sheeple]

On 30/08/2021 at 17:56, Sprrite said:

Whilst inflation is increasing, I'm still doubtful that IRs will rise. The end of furlough is nearly upon us and I do expect a rise in unemployment. Whilst there are currently worker shortages in certain sectors, I wonder how long that will last with furlough no longer being an option.

This guy 

https://en.wikipedia.org/wiki/John_Paulson 

today on Bloomberg saying that this time the printed money HAS hit the money supply, where in 2008 I think he said it didn`t, not in a meaningful way anyway, so expect inflation. He also said that buying a house was in his opinion the best investment an "average person" could make and went on to recommend that someone with 100k should leverage up to a million pound house! Do you think he is planning  "2008 The Sequel?"

[dances with sheeple]

On 30/08/2021 at 23:27, Twenty Something said:

Spot on reply in my view, and what I have been posting on other threads. The end of the stamp duty holiday and the end of furlough will both pass without a whimper. Wage inflation is the concern, and reports such as the lorry drivers who are earning £60k per year will filter through into the price of your bread on the shelf. So, things inflate away, and those who hold assets such as gold, houses, bitcoin and the such will win. Those who hold savings in their fiat currency will lose. Eventually the deck of cards will fall over, but I don't believe we are going to see that short to mid term (read 5 - 10 years). There is a way for this to run yet with the return to normality, the resumption of holidays, nights out, discretionary spending and the such driving a boom over the next few years. Meanwhile my mortgage debt deflates away with every yearly pay rise, and while it may not create as good a return as bitcoin, I'm certain buying a house isn't going to be something I live to regret. As with all of history, the rich will get richer, the middle classes will get a bit of a backhander, and the poorer ends of society will by and large remain stuck where they are. The very function of the ruling classes whether right or left wing is to maintain the status quo, and betting against them will get you nowhere. 

You have fallen for the banker hype of the biggest deflationary bust in history having nowhere to go but into the biggest inflationary boom in history! The economy was in trouble before Covid, they may have printed a year or so`s worth of inflation but they have fixed none of the structural issues in the system, being attached to large mortgage debt is the last place you want to be if things break down. China seems to be heading in their own direction now, look there IMO for the next credit market crisis.

[Twenty Something]

45 minutes ago, dances with sheeple said:

Someone with 200k in their pocket is way ahead of the average person who thinks they are "middle class", most of that group are relying on debt and the housing bubble staying intact for their status and lifestyle IMO. There will be plenty of people who know how to milk the benefits system with far more cash flow than some "middle class" couple eating beans to pay the big mortgage.

That's kind of the point that was being made though. Is it money alone that makes you middle class, or is it attitude, how you hold your cutlery, which school you went to? Your definition of class seems to be solely rooted within the financial domain, hence me making the point that if an illiterate school drop out wins £200k on a scratch card, are they now middle class solely because they can now buy a new car and move to a nicer area?

[Twenty Something]

52 minutes ago, dances with sheeple said:

You have fallen for the banker hype of the biggest deflationary bust in history having nowhere to go but into the biggest inflationary boom in history! The economy was in trouble before Covid, they may have printed a year or so`s worth of inflation but they have fixed none of the structural issues in the system, being attached to large mortgage debt is the last place you want to be if things break down. China seems to be heading in their own direction now, look there IMO for the next credit market crisis.

Just for a bit of fun, I did a search on your username and the word 'Crash'. Why? Well, it's a bit of a slow Wednesday night, but also to highlight the folly of your trying to assert that it is I who has got it all wrong and fallen for the evil bankers scheme. 

2009 - In response to 95% mortgages being offered again:

On 22/01/2009 at 16:32, dances with sheeple said:

We will never see these again IMO. Their only purpose was to allow people who couldn`t afford to, jump on the HPI slag heap created by the VI`s.

2010 - The big one is coming. It really is.

On 01/06/2010 at 12:55, dances with sheeple said:

Amen. This crash has never been more on, it is on with a VENGANCE. The Great Bear has a thorn is his ass and wants to eat some IO campers!

 

On 21/06/2010 at 10:00, dances with sheeple said:

big crash ahead IMO.

2011 - The crash is just around the corner.

On 03/01/2011 at 20:32, dances with sheeple said:

The Japan situation can`t apply to us now though, can it? Surely this is just window dressing from the minister, he knows the crash is just around the corner and wants to pretend to be shocked and awed when it happens?

2012 - The crash is still definitely on, a really nasty crash as sure as night follows day, it's happening currently.

On 24/10/2012 at 12:16, dances with sheeple said:

Assuming that everybody in the country is going to barricade themselves in their house and wait, and wait....and wait? Not going to happen, people will panic when those that really must sell lower the price for the street. There is going to be a very nasty crash soon IMO. (cue waffle about it hasn`t happened yet etc. It IS happening, volumes are half what they were, price collapse will follow as night follows day.)

2013 - crash back on with a vengeance. Silly sheeple just can't see it:

On 12/09/2008 at 09:32, dances with sheeple said:

So crash back on with a vengence, negative sentiment times ten after the papers spin his words as the BOE deserting the sheeple?

2014 crash in progress:

On 22/07/2014 at 22:30, dances with sheeple said:

Love the crash in progress updates. keep them coming!

Skipping on a bit - 2017 stocks and houses will crash.

On 10/05/2017 at 16:44, dances with sheeple said:

This time stocks AND houses will crash, we are totally detached from the fundamentals of the past IMO.

2019 - how could we not touch upon Brexit causing the crash, and it will be even bigger:

On 25/01/2019 at 15:00, dances with sheeple said:

Maybe not, but the crash will be all the bigger as we "crash out" and the rest of the EZ disintegrates.

2020 - those silly mums getting it all wrong:

On 20/05/2020 at 22:47, dances with sheeple said:

Big lines of posters forming now on Mumsnet to say how it can`t crash, or will come back very quickly, especially in "desirable" areas, mild sense of panic in the air I think.

2021 - Brexit / COVID will 'do it's work first' and then the big meltdown is coming.

On 30/01/2021 at 23:28, dances with sheeple said:

Voting for independence will be a sure way to crash house prices, and the rest of the economy IMO. Best to let the Brexit/Covid effect do it`s work first, let`s not go for the full meltdown just yet.

And here we are today with your latest post that I've been duped and your words are gospel. You've basically spent at least 15 years being wrong except for some euphoria in 2008/09, so I think I will respectfully pay no attention to your latest prophecy. 

 

 

[TheCountOfNowhere]

1 hour ago, dances with sheeple said:

You have fallen for the banker hype of the biggest deflationary bust in history having nowhere to go but into the biggest inflationary boom in history! The economy was in trouble before Covid, they may have printed a year or so`s worth of inflation but they have fixed none of the structural issues in the system, being attached to large mortgage debt is the last place you want to be if things break down. China seems to be heading in their own direction now, look there IMO for the next credit market crisis.

Dws... Are you saying you think the inflation is the lie or the deflation is? 

 

I'm genuinely not clear what you mean but would like clarification. 

There are signs of s slow down coming but USA has a crazy infrastructure spend in the pipeline. 

As ever could go either way but inflation more likely according to everyone. I get the feeling the msm are trying to encourage it even

[Twenty Something]

2 hours ago, Flat Bear said:

Thank you Twenty Something

I note you have been a member since 2005 so it is probably Forty Something now

I agree with you and do not think you are doing, or have done, the wrong thing at all. The only other real option you had was to rent which is not a very good option at this time in this country. As you say slowly but surely your mortgage will deflate nominally and with inflation growing it will get eroded in real terms as well. You also have the certainty and security that owning a property brings.

Purely as an "investment", as some people still see houses, I do not see it as the best option. If, I am not by the way, I was a BTL landlord with a larger portfolio I would be looking to off load them all as quickly as I could. There are a few reasons, with interest rate rises albeit relatively small to begin with on the horizon, with the new tax regulations and other new regulations government is apply and the likely tax on wealth as opposed to earnings we are likely to see over the next decade there is very little upside for owning property purely as an investment.

I have personally noticed more sales online from BTLers at this time, although I do not look very often. I do not see this being a reason for prices to fall at all but just an observation.

I am indeed a 40 something now - how time flies. Seen many posters and 'characters' come and go on here as I have dabbled over the years, many prophecies, many the crash is on posts, and then the more **** sure of course as per dancing with sheeple's string of predictions above. Coming up for two years now since I had my offer accepted on where I am living now, and guess what, it was all about to crash, worst decision, financial ruin, idiot etc etc. You either join in the game or you don't hey? You can't beat it. You can't predict it. You make a decision based on your n=1 situation and keep your fingers crossed that life doesn't give you lemons, and even then, I love lemonade!  

[msi]

Driver shortage: 'I got a big pay rise overnight'

 

Tom Reddy has been driving lorries for more than 15 years and his pay was recently increased from £17.50 an hour to £24.50 - a 40% jump.

 

To add an anecdote from a Food Manufacturing friend - they are due their usual pay rise in December, but have been told the 2022 pay rise is brought forward into January - a double lift.  What's the betting that there will be a December rise anyway?

 

Said before, when this goes from one-offs to into regular rises and inflation, then IRs go up - can't have the masses earning more

[scepticus]

8 hours ago, msi said:

 

Said before, when this goes from one-offs to into regular rises and inflation, then IRs go up - can't have the masses earning more

Quite so. Has always been the problem with the financial system logic. IRs must go up in line with inflation to protect real value of savings, but no such similar guarantee or protection for wages.

That boondoggle works for a while, but not forever.

Wages should go up and real rates should be negative to rebalance the wage/interest income situation.

[dances with sheeple]

On 01/09/2021 at 22:23, Twenty Something said:

Just for a bit of fun, I did a search on your username and the word 'Crash'. Why? Well, it's a bit of a slow Wednesday night, but also to highlight the folly of your trying to assert that it is I who has got it all wrong and fallen for the evil bankers scheme. 

2009 - In response to 95% mortgages being offered again:

2010 - The big one is coming. It really is.

 

2011 - The crash is just around the corner.

2012 - The crash is still definitely on, a really nasty crash as sure as night follows day, it's happening currently.

2013 - crash back on with a vengeance. Silly sheeple just can't see it:

2014 crash in progress:

Skipping on a bit - 2017 stocks and houses will crash.

2019 - how could we not touch upon Brexit causing the crash, and it will be even bigger:

2020 - those silly mums getting it all wrong:

2021 - Brexit / COVID will 'do it's work first' and then the big meltdown is coming.

And here we are today with your latest post that I've been duped and your words are gospel. You've basically spent at least 15 years being wrong except for some euphoria in 2008/09, so I think I will respectfully pay no attention to your latest prophecy. 

 

 

When did you buy your house?

[dances with sheeple]

On 01/09/2021 at 22:23, Twenty Something said:

Just for a bit of fun, I did a search on your username and the word 'Crash'. Why? Well, it's a bit of a slow Wednesday night, but also to highlight the folly of your trying to assert that it is I who has got it all wrong and fallen for the evil bankers scheme. 

2009 - In response to 95% mortgages being offered again:

2010 - The big one is coming. It really is.

 

2011 - The crash is just around the corner.

2012 - The crash is still definitely on, a really nasty crash as sure as night follows day, it's happening currently.

2013 - crash back on with a vengeance. Silly sheeple just can't see it:

2014 crash in progress:

Skipping on a bit - 2017 stocks and houses will crash.

2019 - how could we not touch upon Brexit causing the crash, and it will be even bigger:

2020 - those silly mums getting it all wrong:

2021 - Brexit / COVID will 'do it's work first' and then the big meltdown is coming.

And here we are today with your latest post that I've been duped and your words are gospel. You've basically spent at least 15 years being wrong except for some euphoria in 2008/09, so I think I will respectfully pay no attention to your latest prophecy. 

 

 

That you can`t count is also a red flag...LOL.

[dances with sheeple]

On 01/09/2021 at 22:29, TheCountOfNowhere said:

Dws... Are you saying you think the inflation is the lie or the deflation is? 

 

I'm genuinely not clear what you mean but would like clarification. 

There are signs of s slow down coming but USA has a crazy infrastructure spend in the pipeline. 

As ever could go either way but inflation more likely according to everyone. I get the feeling the msm are trying to encourage it even

Fund manager today on Bloomberg saying that throwing money into the system is no longer "doing anything", people on here already knew that though?

[Twenty Something]

3 hours ago, dances with sheeple said:

That you can`t count is also a red flag...LOL.

Well you joined in 2007, so 14 years on here, and I bet you didn’t wake up and change your mind about the direction of housing then, so yes, I bet at least 15 years, probably even more. In terms of counting, I think the search I did brought back 584 mentions of the word ‘crash’. You’ve gotta be up there with the count in terms of the most wrong poster on this forum!? 

[Odysseus]

11 minutes ago, Twenty Something said:

Well you joined in 2007, so 14 years on here, and I bet you didn’t wake up and change your mind about the direction of housing then, so yes, I bet at least 15 years, probably even more. In terms of counting, I think the search I did brought back 584 mentions of the word ‘crash’. You’ve gotta be up there with the count in terms of the most wrong poster on this forum!? 

There are degrees of wrongness though. For example a long long time ago there was a great contributor call CGNAO who I believe is still living in a bunker eating beans. He stopped posting when his generator ran out of fuel. I think he’s still there.

 

EDIT: to add there was also a loon called Erranta who I think has probably been sectioned. It’s not possible to decipher if he was ever wrong as you needed to know the code he used which was only available to those with extra terrestrial telepathic powers. I miss those days.

Edited September 3, 2021 by Odysseus

[Dreamcasting]

14 minutes ago, Twenty Something said:

Well you joined in 2007, so 14 years on here, and I bet you didn’t wake up and change your mind about the direction of housing then, so yes, I bet at least 15 years, probably even more. In terms of counting, I think the search I did brought back 584 mentions of the word ‘crash’. You’ve gotta be up there with the count in terms of the most wrong poster on this forum!? 

Never take anything on this forum seriously. A lot of the old timers have no interest in making houses affordable for the masses but are just trying to correct a huge mistake they made. Basically, they STR'd thinking they would buy a house much cheaper after the 'crash' that never came. This was the biggest mistake anyone could have made in their lifetime. They've probably lost on the stock market over the years too because they are really just useless at trading. So.... lost thousands over the years and now has to pay 3 times the price to buy the house they sold all those years ago.. of course the money has ran out so can't, and want everyone taking down with them as "revenge".

[Twenty Something]

12 minutes ago, Odysseus said:

There are degrees of wrongness though. For example a long long time ago there was a great contributor call CGNAO who I believe is still living in a bunker eating beans. He stopped posting when his generator ran out of fuel. I think he’s still there.

 

EDIT: to add there was also a loon called Erranta who I think has probably been sectioned. It’s not possible to decipher if he was ever wrong as you needed to know the code he used which was only available to those with extra terrestrial telepathic powers. I miss those days.

There have certainly been some ‘wrong uns’ over the years. What I find fascinating however is despite being repeatedly wrong, the more fervent of posters on here continue to profess it is the general public who are sheeple and don’t get it…

[Dreamcasting]

And while we are at it, it may be fun to do a search on posters who claim that interest rates are on the way up over the last 10 years.

[Twenty Something]

3 minutes ago, Dreamcasting said:

Never take anything on this forum seriously. A lot of the old timers have no interest in making houses affordable for the masses but are just trying to correct a huge mistake they made. Basically, they STR'd thinking they would buy a house much cheaper after the 'crash' that never came. This was the biggest mistake anyone could have made in their lifetime. They've probably lost on the stock market over the years too because they are really just useless at trading. So.... lost thousands over the years and now has to pay 3 times the price to buy the house they sold all those years ago.. of course the money has ran out so can't, and want everyone taking down with them as "revenge".

I see it really as a sort of second life allowing the virtual playing out of fantasies. Must be the highest concentration of millionaires on any forum I’ve ever visited.