UK 2-year gilt yield has just risen to its highest since 2009

[adarmo]

2 minutes ago, scottbeard said:

100% am, no idea why.  The internet for you.

Increased relative to RPI.   Average Incomes are notoriously hard to measure (do you do a Full Time Equivalent?  Do you use mean or median? etc)  but from 1990 to 2022 they have roughly gone up about 220% i.e. someone on £10k in 1990 would earn £32k today.

Conversely, RPI has been about1 66% ie something that cost £10 to buy in 1990 would cost £26.60 today.

However, as we all know, houses are not included in the RPI so if you were to take house prices into account instead of the mortgage cost (which is what is in the RPI) then that would eat up a big chunk of that real increase.

Lol on your first point. It's another debate. The good old days are generally over fondly remembered imho. But I accept people were leading fairly transient lives in the 1990s, more so today but certainly the 1960s and earlier people barely moved. 

 

Agree on houses, which is the issue and why I'm here... still.... after buying 5 years ago. But in trying to beat the system my view is that right now at least you are getting 'paid' to borrow money. Whether it continues is anyone's guess. I'm not fussed about the price of the house, I'm concerned about what's happening to the debt and right now it's shrinking. Rapidly. 

[dances with sheeple]

36 minutes ago, adarmo said:

Lol on your first point. It's another debate. The good old days are generally over fondly remembered imho. But I accept people were leading fairly transient lives in the 1990s, more so today but certainly the 1960s and earlier people barely moved. 

 

Agree on houses, which is the issue and why I'm here... still.... after buying 5 years ago. But in trying to beat the system my view is that right now at least you are getting 'paid' to borrow money. Whether it continues is anyone's guess. I'm not fussed about the price of the house, I'm concerned about what's happening to the debt and right now it's shrinking. Rapidly. 

Yes, but you need a 30 year mortgage now to afford the price of the house, plenty of time to be caught out by interest rates rises, a scam is still a scam even when it is cheap, most punters with big debt won`t win a prize.

 

 

[adarmo]

1 hour ago, dances with sheeple said:

Yes, but you need a 30 year mortgage now to afford the price of the house, plenty of time to be caught out by interest rates rises, a scam is still a scam even when it is cheap, most punters with big debt won`t win a prize.

 

 

I've 35 years but that's because the interest rate is 0.99% and inflation is 6.2%. In my mind I've getting 5.2% paid off these last 12 months which is circa £20K. In actual repayment terms I'll probably make £10k and the interest is about £4K... all very rough numbers. 

This is also part of the problem, if you're on the homey side of the fence you're having wealth transferred to you. If you're saving for a deposit you're having it taken from you.

Note I'd like to have started out with much lower house prices but if you have to have it one way or other it's an easy choice if you're privileged enough to be able to have that choice. 

[adarmo]

2 hours ago, dances with sheeple said:

You implied that life was wonderful compared to 30 years ago, it isn`t, the average person has far more potentially crippling debt and is much more stressed and less happy than 30 years ago IMO.

I didn't. I stated materially people are better off. Material possessions. That's not quality of life but they can buy more stuff. How is this miracle possible? Rising real incomes. 

It does seem that you're attempting to shift a statement of rising real incomes being good to equate to falling quality of life? How do you get from one to the other?

[adarmo]

2 hours ago, dances with sheeple said:

1) The manufacturing and supply chains can`t just be brought back "onshore" overnight, the volatility from China will pop the housing bubble before they can turn the ship around and we all get to live in the new Utopia with sky high house prices and soft warm currents of inflation lifting everyone to a blissful plateau of comfort with all their little gadgets around them as they think how hard it must have been living in houses made of earth and branches in 1990.

2) The point was about how people behaved around other people in public spaces, you started talking about "knowing everyone`s business", so you definitely missed the point and didn`t experience what I am talking about, essentially it is a less distracted, less me me me, more comfortable social environment that no longer exists.

3) We have never had an "inflationary environment" with these levels of personal debt, as i said there is no exit without lots of pain for a lot of people now. (It will mainly be the heavily indebted and multiple property owners that get hit)

1. Who said overnight? The point is that China doesn't have some monopoly on mass production. Re-shoring is not a new phenomenon btw. The low inflation of the past 20 years might be about to end anyway as Chinese workers demand every rising wages and then inflation rises (great if you've debt) and reshoring rises demand for workers further yet still. 

2. A nostalgic utopia that isn't relevant to rising real wages. I'm not sure why you continue with this?

3. Private debt hit 240% of GDP in 2009 and inflation was running at 3.5%. I can't find figures for 2022 but in 2020 it was 212%. In an inflationary environment the paid will be felt by the cash holders not the debt holders unless interest rates suddenly start rising dramatically..... will they? won't they? I'm fixed, many of my friends are fixed for up to ten years. Let inflation rip and I'll be able to pay the mortgage with a minimum wage job in a decade. 

[dances with sheeple]

15 hours ago, adarmo said:

I've 35 years but that's because the interest rate is 0.99% and inflation is 6.2%. In my mind I've getting 5.2% paid off these last 12 months which is circa £20K. In actual repayment terms I'll probably make £10k and the interest is about £4K... all very rough numbers. 

This is also part of the problem, if you're on the homey side of the fence you're having wealth transferred to you. If you're saving for a deposit you're having it taken from you.

Note I'd like to have started out with much lower house prices but if you have to have it one way or other it's an easy choice if you're privileged enough to be able to have that choice. 

Fixed for 35 years?

[dances with sheeple]

14 hours ago, adarmo said:

I didn't. I stated materially people are better off. Material possessions. That's not quality of life but they can buy more stuff. How is this miracle possible? Rising real incomes. 

It does seem that you're attempting to shift a statement of rising real incomes being good to equate to falling quality of life? How do you get from one to the other?

What stuff? The biggest purchase most people ever make, basic shelter, is many many times more expensive, a working lifetime of debt for many, that alone makes your statement absurd. If you are talking about general tat the "miracle" was loads of cheap debt for the masses and not much else.

[dances with sheeple]

14 hours ago, adarmo said:

1. Who said overnight? The point is that China doesn't have some monopoly on mass production. Re-shoring is not a new phenomenon btw. The low inflation of the past 20 years might be about to end anyway as Chinese workers demand every rising wages and then inflation rises (great if you've debt) and reshoring rises demand for workers further yet still. 

2. A nostalgic utopia that isn't relevant to rising real wages. I'm not sure why you continue with this?

3. Private debt hit 240% of GDP in 2009 and inflation was running at 3.5%. I can't find figures for 2022 but in 2020 it was 212%. In an inflationary environment the paid will be felt by the cash holders not the debt holders unless interest rates suddenly start rising dramatically..... will they? won't they? I'm fixed, many of my friends are fixed for up to ten years. Let inflation rip and I'll be able to pay the mortgage with a minimum wage job in a decade. 

1) If China doesn`t have a monopoly on mass production why all the panic about "supply chains"? Your assertions about Inflation Great For Debt are just a large mortgage holders wish list I`m afraid, it is unknown at this point what will happen as we are in uncharted waters, higher rates mean new borrowers will pay less for your house and the value of your house will drop IMO.

2) Your point that people are "better off" now than 30 years ago was nonsense, the price of basic shelter now makes that statement false

3) So in your Utopia wages rise massively, interest rates hardly move and large mortgage debt holders clear their debt working part-time at Greggs, LOL, excuse me if I don`t buy that one just yet, in an inflationary environment a cash holder can move their money into various investments, you can`t do that with a mortgage debt.

[adarmo]

2 hours ago, dances with sheeple said:

Fixed for 35 years?

For 5 years. 

2 hours ago, dances with sheeple said:

What stuff? The biggest purchase most people ever make, basic shelter, is many many times more expensive, a working lifetime of debt for many, that alone makes your statement absurd. If you are talking about general tat the "miracle" was loads of cheap debt for the masses and not much else.

It seems you can't settle on a counter argument here. The assertion I'm making is a simple one in relation to inflation and fixed debt. The question is this: "Have real incomes increased over the last 30 years?"

2 hours ago, dances with sheeple said:

1) If China doesn`t have a monopoly on mass production why all the panic about "supply chains"? Your assertions about Inflation Great For Debt are just a large mortgage holders wish list I`m afraid, it is unknown at this point what will happen as we are in uncharted waters, higher rates mean new borrowers will pay less for your house and the value of your house will drop IMO.

2) Your point that people are "better off" now than 30 years ago was nonsense, the price of basic shelter now makes that statement false

3) So in your Utopia wages rise massively, interest rates hardly move and large mortgage debt holders clear their debt working part-time at Greggs, LOL, excuse me if I don`t buy that one just yet, in an inflationary environment a cash holder can move their money into various investments, you can`t do that with a mortgage debt.

1. Are you predicting a fall in house prices? You're in excellent company on here mate. Here's the thing. I don't care if my house falls in price. I can move to another area in a sideways move. Makes no different to me. What I do care about is owning a house mortgage free at some point and that means clearing the mortgage. Inflation will help do this. If inflation is 25% and interest rates are 187% and prices fall 20% I'm happy. 

2. I didn't say 'better off' with the broad interpretation that may include. You made it up. I said materially better off. Again, and it's getting pretty boring having to ask you this repeatedly while you shirk the answer, have real incomes increased or not over the last 30 years?

3. Whether it's utopia or not depends on what side of the fence you are sitting on. Who is getting a mortgage working at Greggs? Are you even joining up your thoughts at this point? BTW I can actually move my mortgage debt into different investments as I've extended the mortgage and have about £70K of it sitting in various investments. 0.99% fixed for five years and Chase bank are paying 1.5%. 

 

[dances with sheeple]

2 minutes ago, adarmo said:

For 5 years. 

It seems you can't settle on a counter argument here. The assertion I'm making is a simple one in relation to inflation and fixed debt. The question is this: "Have real incomes increased over the last 30 years?"

1. Are you predicting a fall in house prices? You're in excellent company on here mate. Here's the thing. I don't care if my house falls in price. I can move to another area in a sideways move. Makes no different to me. What I do care about is owning a house mortgage free at some point and that means clearing the mortgage. Inflation will help do this. If inflation is 25% and interest rates are 187% and prices fall 20% I'm happy. 

2. I didn't say 'better off' with the broad interpretation that may include. You made it up. I said materially better off. Again, and it's getting pretty boring having to ask you this repeatedly while you shirk the answer, have real incomes increased or not over the last 30 years?

3. Whether it's utopia or not depends on what side of the fence you are sitting on. Who is getting a mortgage working at Greggs? Are you even joining up your thoughts at this point? BTW I can actually move my mortgage debt into different investments as I've extended the mortgage and have about £70K of it sitting in various investments. 0.99% fixed for five years and Chase bank are paying 1.5%. 

 

1) What difference does moving to another area make if your house price falls?

2) How can you be "materially better off" with a 35 year mortgage debt than a generation that bought their ex-council basic shelter for 10k, LOL.

3) Are you really joining the dots and thinking things through is the question IMO.

[adarmo]

5 minutes ago, dances with sheeple said:

1) What difference does moving to another area make if your house price falls?

2) How can you be "materially better off" with a 35 year mortgage debt than a generation that bought their ex-council basic shelter for 10k, LOL.

3) Are you really joining the dots and thinking things through is the question IMO.

1. OMG, you've missed the point. Again. 

2. and again!

3. Yes, clearly. 

1. The point is what does it matter what the house price is? I might suddenly need or want to move house. A sideways move is fine, house could be worth £1 or £1M. Actually I'd prefer a price crash to do a sideways move to save on SDLT. Why does it matter if my house falls in price?

2. So real incomes haven't increased over the last 30 years? Which is it? Because it seems you're hell bent on not accepting the truth. The generation that bought their council houses for £10k had low earnings, probably didn't have a car, or a TV, certainly not multiple TVs, holidays, clothes, ALL THE MATERIAL STUFF.

3. Yes, clearly

If you do not buy a house I do not care. Nobody will be begging you to buy one any time soon. Keep renting or living with the parents if you don't want to buy. Rents will keep rising and house prices will, over the medium term at least, keep rising.

All I'm trying to demonstrate to you is that a debt taken today is fixed today and that it will fall in real value over the years that follow. It'll get easier and easier to clear that debt. The sooner you accept this the better off you'll be. If you don't accept it you'll be renting forever. 

Unless you think real incomes will fall for the next 30 years  

[dances with sheeple]

22 hours ago, adarmo said:

1. OMG, you've missed the point. Again. 

2. and again!

3. Yes, clearly. 

1. The point is what does it matter what the house price is? I might suddenly need or want to move house. A sideways move is fine, house could be worth £1 or £1M. Actually I'd prefer a price crash to do a sideways move to save on SDLT. Why does it matter if my house falls in price?

2. So real incomes haven't increased over the last 30 years? Which is it? Because it seems you're hell bent on not accepting the truth. The generation that bought their council houses for £10k had low earnings, probably didn't have a car, or a TV, certainly not multiple TVs, holidays, clothes, ALL THE MATERIAL STUFF.

3. Yes, clearly

If you do not buy a house I do not care. Nobody will be begging you to buy one any time soon. Keep renting or living with the parents if you don't want to buy. Rents will keep rising and house prices will, over the medium term at least, keep rising.

All I'm trying to demonstrate to you is that a debt taken today is fixed today and that it will fall in real value over the years that follow. It'll get easier and easier to clear that debt. The sooner you accept this the better off you'll be. If you don't accept it you'll be renting forever. 

Unless you think real incomes will fall for the next 30 years  

Are you having a F*ucking laugh, LOL, give yourself a shake FFS!

[dances with sheeple]

22 hours ago, adarmo said:

1. OMG, you've missed the point. Again. 

2. and again!

3. Yes, clearly. 

1. The point is what does it matter what the house price is? I might suddenly need or want to move house. A sideways move is fine, house could be worth £1 or £1M. Actually I'd prefer a price crash to do a sideways move to save on SDLT. Why does it matter if my house falls in price?

2. So real incomes haven't increased over the last 30 years? Which is it? Because it seems you're hell bent on not accepting the truth. The generation that bought their council houses for £10k had low earnings, probably didn't have a car, or a TV, certainly not multiple TVs, holidays, clothes, ALL THE MATERIAL STUFF.

3. Yes, clearly

If you do not buy a house I do not care. Nobody will be begging you to buy one any time soon. Keep renting or living with the parents if you don't want to buy. Rents will keep rising and house prices will, over the medium term at least, keep rising.

All I'm trying to demonstrate to you is that a debt taken today is fixed today and that it will fall in real value over the years that follow. It'll get easier and easier to clear that debt. The sooner you accept this the better off you'll be. If you don't accept it you'll be renting forever. 

Unless you think real incomes will fall for the next 30 years  

Looks like you have made a TON of assumptions about the future before jumping into a 35 year mortgage debt. Good luck. Many people "buying" recently will NEVER  clear their mortgage debt IMO.

 

 

[adarmo]

35 minutes ago, dances with sheeple said:

Are you having a F*ucking laugh, LOL, give yourself a shake FFS!

I'm certainly laughing

[adarmo]

31 minutes ago, dances with sheeple said:

Looks like you have made a TON of assumptions about the future before jumping into a 35 year mortgage debt. Good luck. Many people "buying" recently will NEVER  clear their mortgage debt IMO.

You still haven't answered the question on real incomes. So....... what is it?

What assumptions? The world not ending? It seems like the counter side of your argument must be that someone not buying would also be making a ton of assumptions about the future too? That's all people can do about the future though isn't it? So I guess in one sense anyone making any future plans is also just making assumptions. That's fine. Just assess the risk of those assumptions. 

Like the risk of sitting on your hands and waiting and seeing is:

1. reduced potential mortgage term as you age
2. rising real house prices 
3. falling real value of your deposit
4. renting and supporting the BTL industry 

I'm sure I'll be just fine but I appreciate the nice wishes. I wish the same for you too. I'm trying to argue with you, I'm trying to help you. 

[dances with sheeple]

3 minutes ago, adarmo said:

I'm certainly laughing

Sure you are, do your research first or talk to an adult who lived in the early 90`s before trying to have a grown up discussion in future.

[dances with sheeple]

1 minute ago, adarmo said:

You still haven't answered the question on real incomes. So....... what is it?

What assumptions? The world not ending? It seems like the counter side of your argument must be that someone not buying would also be making a ton of assumptions about the future too? That's all people can do about the future though isn't it? So I guess in one sense anyone making any future plans is also just making assumptions. That's fine. Just assess the risk of those assumptions. 

Like the risk of sitting on your hands and waiting and seeing is:

1. reduced potential mortgage term as you age
2. rising real house prices 
3. falling real value of your deposit
4. renting and supporting the BTL industry 

I'm sure I'll be just fine but I appreciate the nice wishes. I wish the same for you too. I'm trying to argue with you, I'm trying to help you. 

No, you have a ton of debt on a very illiquid asset and you are getting scared, it is a natural human response when the world you borrowed into turns on it`s head over-night.

[adarmo]

6 minutes ago, dances with sheeple said:

Sure you are, do your research first or talk to an adult who lived in the early 90`s before trying to have a grown up discussion in future.

I lived in the 1990s. You've given nothing back to demonstrate any of your counter non-arguments. 

You refuse to accept real incomes rise over time. Probably why you'll be renting forever. 

If you're a grown up in the 1990s and have such a gift of foresight why don't you own a house?

[adarmo]

4 minutes ago, dances with sheeple said:

No, you have a ton of debt on a very illiquid asset and you are getting scared, it is a natural human response when the world you borrowed into turns on it`s head over-night.

Now you're making up my feelings. How exactly am I scared? 

It seems you think I'm expecting nothing adverse to happen over the next 5 years? You'd be an idiot to assume that. Here's the thing, I could lose my job tomorrow, not work for 3 years and still continue living as I do today from my savings because my housing costs are fixed, unlike being a tenant. 

[dances with sheeple]

3 minutes ago, adarmo said:

Now you're making up my feelings. How exactly am I scared? 

It seems you think I'm expecting nothing adverse to happen over the next 5 years? You'd be an idiot to assume that. Here's the thing, I could lose my job tomorrow, not work for 3 years and still continue living as I do today from my savings because my housing costs are fixed, unlike being a tenant. 

Again you have obviously no experience of being a private tenant with a sensible private landlord who wants long term occupation of their property with minimal hassle, your reasons for that 35 year interest rate sensitive debt are diminishing by the minute TBH.

[dances with sheeple]

7 minutes ago, adarmo said:

I lived in the 1990s. You've given nothing back to demonstrate any of your counter non-arguments. 

You refuse to accept real incomes rise over time. Probably why you'll be renting forever. 

If you're a grown up in the 1990s and have such a gift of foresight why don't you own a house?

Not as an adult, you were playing with crayons at that point, if you can`t grasp that cheap debt not wage rises  funded all the lifestyle "improvements" that you think are a recent thing or that house prices have been pushed up by cheap debt not wages then there is little point in throwing insults back and forth any longer?

[adarmo]

1 hour ago, dances with sheeple said:

Again you have obviously no experience of being a private tenant with a sensible private landlord who wants long term occupation of their property with minimal hassle, your reasons for that 35 year interest rate sensitive debt are diminishing by the minute TBH.

How do you know this? Increasingly you are typing stuff that's a gut feel. That's fine. 

I've rented previously, actually my last landlord was a lovely guy with excellent reputation locally. Guess what? Rent increased each year. Could negotiate and it was minimal, but it went up. Guess what has happened to the interest on my mortgage debt (the renting from the bank bit) since taking out the mortgage? 

The reason for the debt is to buy a house. The reason for 35 years is this 'why would you pay it back early when you can borrow at 1%, deposit at 1.5% and watch inflation burn that debt at 8% a year. 

What's the reason for not doing that?

[adarmo]

1 hour ago, dances with sheeple said:

Not as an adult, you were playing with crayons at that point, if you can`t grasp that cheap debt not wage rises  funded all the lifestyle "improvements" that you think are a recent thing or that house prices have been pushed up by cheap debt not wages then there is little point in throwing insults back and forth any longer?

It seems you think I'm throwing insults? I'm sorry if you feel that way. 

You are now arguing that real wages haven't increase but everyone just borrowed money to buy all their stuff instead? 

Actually, I am more than aware house prices are the result of the supply and demand of cheap and easy credit. You may, or may not, have seen my other posts arguing there's not a shortage of houses in the UK. It's an allocation issue. 

Back to the question. Have real incomes risen or fallen in the last 30 years?

[cnick]

Nobody mentions fractional reserve banking here anymore....such a shame. People should dig out and read some of the early threads around 2009.