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I Blame The Maths Teachers!

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Now I'm no maths genius, but even I could see the fatal flaw in this arguement as to why houses will never really be more affordable if they do fall in price because of higher interest rates...

But Housepricecrash people seem to have this dream that they will then swoop in and buy all the properties cheap. But if they can't afford to buy now, they won't be able to afford to buy then. If interest rates triple and house prices drop by 2 thirds they still have to pay the same amount in mortgage repayments each month. And they still can't afford it!

Ran this theory through a mortgage repayment calculator on the Guardian Website and here's the results...

House Price - £300,000

Interest Rate - 5%

Total Repayable over 25 Years - £526,131

Monthly Repayments - £1,753

House Price - £100,000 (two thirds of original price)

Interest Rate - 15% (original rate tripled)

Total Repayable over 25 Years - £384, 249

Monthly Repayments - £1,280

So, no difference then ... oh, apart from £141,882 in the total repayable amount which equates to almost £500 a month! Doh!!! :blink:

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Now I'm no maths genius, but even I could see the fatal flaw in this arguement as to why houses will never really be more affordable if they do fall in price because of higher interest rates...

Ran this theory through a mortgage repayment calculator on the Guardian Website and here's the results...

House Price - £300,000

Interest Rate - 5%

Total Repayable over 25 Years - £526,131

Monthly Repayments - £1,753

House Price - £100,000 (two thirds of original price)

Interest Rate - 15% (original rate tripled)

Total Repayable over 25 Years - £384, 249

Monthly Repayments - £1,280

So, no difference then ... oh, apart from £141,882 in the total repayable amount which equates to almost £500 a month! Doh!!! :blink:

Nice one, so why dont you post the facts and figures for them.

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Now I'm no maths genius, but even I could see the fatal flaw in this arguement as to why houses will never really be more affordable if they do fall in price because of higher interest rates...

Ran this theory through a mortgage repayment calculator on the Guardian Website and here's the results...

House Price - £300,000

Interest Rate - 5%

Total Repayable over 25 Years - £526,131

Monthly Repayments - £1,753

House Price - £100,000 (two thirds of original price)

Interest Rate - 15% (original rate tripled)

Total Repayable over 25 Years - £384, 249

Monthly Repayments - £1,280

So, no difference then ... oh, apart from £141,882 in the total repayable amount which equates to almost £500 a month! Doh!!! :blink:

He is special

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Nice one, so why dont you post the facts and figures for them.

Registered on MSE earlier and seem to be able to login OK, but it won't let me post on any of the forums! Have Emailed them to find out why and will certainly be posting these figures up there ASAP! :ph34r:

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Now I'm no maths genius, but even I could see the fatal flaw in this arguement as to why houses will never really be more affordable if they do fall in price because of higher interest rates...

Ran this theory through a mortgage repayment calculator on the Guardian Website and here's the results...

House Price - £300,000

Interest Rate - 5%

Total Repayable over 25 Years - £526,131

Monthly Repayments - £1,753

House Price - £100,000 (two thirds of original price)

Interest Rate - 15% (original rate tripled)

Total Repayable over 25 Years - £384, 249

Monthly Repayments - £1,280

So, no difference then ... oh, apart from £141,882 in the total repayable amount which equates to almost £500 a month! Doh!!! :blink:

And the rest. Scenario 2 is much cheaper as if interest rates were 15% this means that wages will be going up at a much faster rate than they are now. At 15% after 5 years the monthly payments is halved in real terms. Whereas in scenario 1 it takes about 15 years for monthly payments to be halved in real terms. In other words with 5% case you will be paying a high portion of your take home pay for a much longer period of time.

Inflation (as fiddled by the Government so as not to include HPI) is the homebuyers friend.

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And the rest. Scenario 2 is much cheaper as if interest rates were 15% this means that wages will be going up at a much faster rate than they are now. At 15% after 5 years the monthly payments is halved in real terms. Whereas in scenario 1 it takes about 15 years for monthly payments to be halved in real terms. In other words with 5% case you will be paying a high portion of your take home pay for a much longer period of time.

Inflation (as fiddled by the Government so as not to include HPI) is the homebuyers friend.

Inflation is not a homebuyers friend - Wage inflation is a homebuyers friend

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Quote from MSE

"I think the house price crash people are a bunch of idiots living in a peculiar fantasy world. They seem to think that by posting on an internet forum they somehow prevent themselves being affected by the economic conditions that affect everyone else. "

Yeh right.

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Also, 15% rates would imply masses of inflation (in double digits), so when you throw in wage inflation your actual debt would be steadily eroding each year despite the apparent higher headline cost of servicing the interest.

"I think the house price crash people are a bunch of idiots living in a peculiar fantasy world. They seem to think that by posting on an internet forum they somehow prevent themselves being affected by the economic conditions that affect everyone else. "

Yes indeed! Many on here bought gold over 12 months ago! :lol:

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Quote from MSE

"I think the house price crash people are a bunch of idiots living in a peculiar fantasy world. They seem to think that by posting on an internet forum they somehow prevent themselves being affected by the economic conditions that affect everyone else. "

Yeh right.

You seem to forget there are people out there who are would be cash buyers.

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Inflation is not a homebuyers friend - Wage inflation is a homebuyers friend

Of course today we have high general inflation and asset inflation and very low wage inflation, what a world of pain!

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House Price - £300,000

Interest Rate - 5%

Total Repayable over 25 Years - £526,131

Monthly Repayments - £1,753

House Price - £100,000 (two thirds of original price)

Interest Rate - 15% (original rate tripled)

Total Repayable over 25 Years - £384, 249

Monthly Repayments - £1,280

Guys, don't be mean! 21-eleven, two thirds of 300 000 is 200 000.

Edited by JJJ

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Of course, if you want a real laugh, work out what happens if you buy today at £300k with a nice 2 year fixed IO mortgage, then over the next two years, interest rates triple and the house price drops to £100k.

Then compare your repayments to the people on HPC who decided to wait for two years....

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Don't blame the math teachers. Blame the people who decided that it is hip to not understand simplest mathematics.

I've a math degree and people forever have this urge to tell me how much they suck at the simplest academic discipline in the world. People who pride themselves on being 'smart' turn into illiterate wimps who are proud of their incompetence at this time, gah!

Of course they aren't thick, it is just that they think that it socially is a requirement to be the biggest math loser.

:angry: :ph34r:;)

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Of course they aren't thick, it is just that they think that it socially is a requirement to be the biggest math loser.

"oh, I'm totoally illiterate I cannot even spell my own name, isn't that funny, isn't that clever? I'm dead thick I am, see that sign over there? Yeah, well I can't reed it, because I'm dead thick, it just goes over my head"

People wouldn't pride themselves on saying that, would they?

Society and the establishment now like 'soft' subjects where there is no right or wrong, simply subjective opinion, such nuances are fine when it comes to the arts or the humanities but obviously not so well when it comes to empirical subjects like maths or science, the latest pomo bull$hit just doesn't wash.

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"prices drop by 2 thirds"

Oop. That's me just looking at the numbers section and not the intro. I'll read more intro in the future.

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Now I'm no maths genius, but even I could see the fatal flaw in this arguement as to why houses will never really be more affordable if they do fall in price because of higher interest rates...

Ran this theory through a mortgage repayment calculator on the Guardian Website and here's the results...

House Price - £300,000

Interest Rate - 5%

Total Repayable over 25 Years - £526,131

Monthly Repayments - £1,753

House Price - £100,000 (two thirds of original price)

Interest Rate - 15% (original rate tripled)

Total Repayable over 25 Years - £384, 249

Monthly Repayments - £1,280

So, no difference then ... oh, apart from £141,882 in the total repayable amount which equates to almost £500 a month! Doh!!! :blink:

Are IR's going to triple? I see what you're getting at but it seems like a pointless exercise.

<_<

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Are IR's going to triple? I see what you're getting at but it seems like a pointless exercise.

<_<

and prices won't drop 2 thirds - however, the point is that if prices fall due to IR rises, we dont end up paying the same amount in either monthly payments or in total which is probably what most of us are about - i think most would agree that prices will go up long term i.e. 10 - 20 years etc, just now is not the time to buy, and by sitting on hands for the moment, their is a great saving to be made

oh yes, and the bloke who made the original post (on MSE) sounds like a complete knob

Edited by the end is nigh

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and prices won't drop 2 thirds - however, the point is that if prices fall due to IR rises, we dont end up paying the same amount in either monthly payments or in total which is probably what most of us are about - i think most would agree that prices will go up long term i.e. 10 - 20 years etc, just now is not the time to buy, and by sitting on hands for the moment, their is a great saving to be made

oh yes, and the bloke who made the original post (on MSE) sounds like a complete knob

On the other hand there's no law that says prices won't drop by two thirds, or that prices will go up long term.

<_<

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Guys, don't be mean! 21-eleven, two thirds of 300 000 is 200 000.

Sorry, my bad, I meant to write "two thirds off original price" rather than "two thirds of original price" ... perhaps the English Teachers have something to answer for too? ;)

Are IR's going to triple? I see what you're getting at but it seems like a pointless exercise.

Perhaps not, but they've been up into the early teens before (mid-90s), so who's to say they won't get there again? I think the point of the exercise though was more to highlight the inaccuracy of the statement the guy on MSE made ... which is unfortunately what a lot of people out there do actually believe! Now, where did I put that latest Sudoko puzzle...

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Yes but for prices to drop by two thirds that would mean that we home owners would sell them to you for two thirds of what we paid for them!

Im sorry but theres no way that i would sell my house for less than i paid for it. Even if interest rates doubeled/trippled whatever I would just see it through:

Not go out as much,

get a cheaper car,

cancel gym membership,

go on holiday less,

get a second job

I would do anything but sell my house for less, and aslong as all home owners dont bail out and just see it through then Prices will not drop!

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Im sorry but theres no way that i would sell my house for less than i paid for it. Even if interest rates doubeled/trippled whatever I would just see it through:

what makes you think a person like yourself will remain employable during the coming global economic shenanighans???

There's nothing in either the content of your post or style of writing to suggest that you are a particularly 'good' burger flipper.

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Yes but for prices to drop by two thirds that would mean that we home owners would sell them to you for two thirds of what we paid for them!

Im sorry but theres no way that i would sell my house for less than i paid for it. Even if interest rates doubeled/trippled whatever I would just see it through:

Not go out as much,

get a cheaper car,

cancel gym membership,

go on holiday less,

get a second job

I would do anything but sell my house for less, and aslong as all home owners dont bail out and just see it through then Prices will not drop!

I suspect you have not experienced an economic recession - when many of the olders posters on this site bought their first house we had

No car

Hardly ever went out

Were fitter in those days (no car) so didn't need the gym

Camping if you were lucky

Had at least 2 jobs anyway

That was just to pay the mortgage - when interest rates went up we had to get a lodger - it was harder than you could imagine

I admire your positive attitude and wish you well

CS

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I suppose i have as much chance as everyone else

Been made redundant twice in the last 12 months and always get another job with 2-4 weeks

Its only the same if i was renting tho, I wouldn't be able to afford to buy a house or pay rent if i was unemployed

With all this talk of higher interest rates i have said what i would do but cant help thinking that if i was a lanlord renting a property out i would just increse the rent i was charging to cover the increased mortgage payments!

If all the landlords did the same, the Tennants would have no choice but to pay or buy!

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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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