Chriso Posted July 8, 2006 Share Posted July 8, 2006 Hello everyone! Love the site, some fantastic info being banded about. A quick overview about me, currently have unsecured debt which is being paid off (debt free by 2008 on my calcs), living with parents , a long term girlfriend looking for a place sometimes next spring. I'm very much in the 'bear' frame of mind, mainly due to the house price / annual wage ratio is ticking up to 7 to 1 and unsecured debt has done bonkers, along with reposessions. I think renting for a year to size things up is probably wiser cos the ship could hit the fan v soon. Is this wise? Couple of things I'd like your wisdom on aswell, what is the exact chain of events which means a rise in interest rates means a drop in house prices (sorry im no economist), and how inflation fits into all this. Thanks in adviance for your responses!!! Chris Quote Link to comment Share on other sites More sharing options...
Impartial Posted July 8, 2006 Share Posted July 8, 2006 to be honest no one knows when the situation will stabalise, next year/2 years/5 years cannot be certain. High interest rates mean higher mortgage repayment costs if on a tracker mortgage and more expensive fixed deals and higher borrowing costs. As there is lots of credit out there this will affect the homeowner and may overstretch them causing repossesions. Also it makes btl an unwise investment. the world has brewed up a storm and the dark clouds are looming they will be on our shores soon. Quote Link to comment Share on other sites More sharing options...
warwickbloke Posted July 8, 2006 Share Posted July 8, 2006 Hello everyone! Love the site, some fantastic info being banded about. A quick overview about me, currently have unsecured debt which is being paid off (debt free by 2008 on my calcs), living with parents , a long term girlfriend looking for a place sometimes next spring. I'm very much in the 'bear' frame of mind, mainly due to the house price / annual wage ratio is ticking up to 7 to 1 and unsecured debt has done bonkers, along with reposessions. I think renting for a year to size things up is probably wiser cos the ship could hit the fan v soon. Is this wise? Couple of things I'd like your wisdom on aswell, what is the exact chain of events which means a rise in interest rates means a drop in house prices (sorry im no economist), and how inflation fits into all this. Thanks in adviance for your responses!!! Chris Welcome. This is a huge question, might be an idea to look at as many threads as possible, ignore all the backbiting & sniping, & decide for yourself according to all the differing opinions. Quote Link to comment Share on other sites More sharing options...
redwing Posted July 8, 2006 Share Posted July 8, 2006 Welcome I'd recommend the Classics Forum as a good starting point. Most of the major arguments are there. Then have a go at the econimics papers for some more balanced views, i.e. less ultra-bearish than most of us on the main forum. Happy reading! Quote Link to comment Share on other sites More sharing options...
Chriso Posted July 8, 2006 Author Share Posted July 8, 2006 Thanks chaps! I'm 25 (yes too old to be at home but I caught the travelling bug etc etc) and want to settle down with the good lady. I was trying to make my point to my mates that buying in todays market is mental as rental prices are lower than the interest alone on a mortgage. You can rent a place with full maintenance for £450 or pay interest only mortgae for £520. FIne if your expecting 20% PA but in todays climte, no chance. Needless to say I got laughed/shouted down by the ones who have just got on this year. My best mate just bought a 2 bedroom flat 5 miles from Newcastle city centre for £185,000!!!! He's on good money for the area, but has fell for the credit culture which Im trying quickly to climb out of. Anyone else got any good examples of BLT compared to IO mortgages? Quote Link to comment Share on other sites More sharing options...
numpty Posted July 8, 2006 Share Posted July 8, 2006 Hello everyone! Love the site, some fantastic info being banded about. A quick overview about me, currently have unsecured debt which is being paid off (debt free by 2008 on my calcs), living with parents , a long term girlfriend looking for a place sometimes next spring. I'm very much in the 'bear' frame of mind, mainly due to the house price / annual wage ratio is ticking up to 7 to 1 and unsecured debt has done bonkers, along with reposessions. I think renting for a year to size things up is probably wiser cos the ship could hit the fan v soon. Is this wise? Couple of things I'd like your wisdom on aswell, what is the exact chain of events which means a rise in interest rates means a drop in house prices (sorry im no economist), and how inflation fits into all this. Thanks in adviance for your responses!!! Chris I think there are a number of dark clouds on the horizon which could soon increase interest rates which would certainly see house prices fall. The first could be oil, any problems in the middle east and oil will jump, leading to increases in inflation. To control this the MEPC will have little choice but to increase interest rates to take demand out of the economy and the anticipation of further rate increases will be very serious. The second worry is pensions. A huge black hole in pension provision in both central and local government will result in increases in taxation to help fund it. Further there may well be introduced soon some form of compulsory saving for individuals which will reduce their spending power which will hit there ability to finance debts. Finally when mortgages are offered to FTB where the parents are asked to act as guarantors you know that the peak has been reached! along with the Governor of the Bank of England stating that he does not know how current house prices can be justified you have little to lose by staying out of the property market. Quote Link to comment Share on other sites More sharing options...
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