Monday, Nov 27, 2006

LOL! last ditch attempt to sucker the fool hardy

BBC News: Mortgage 'U-turn' at Nationwide

Just when you think that every trick in the book has been tried, they slip in an old chesnut. At least it shows they've run out of ideas to keep this bubble going

Posted by mr cobblepot @ 09:39 PM (445 views)
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1. glorious sunshine said...

What bubble?

Perhaps property was cheap until recently where it is now just value for money?

Monday, November 27, 2006 11:24PM Report Comment

2. d'oh said...

Glorious, historically average housing has been 3 to 3.5 times average annual earnings across many nations, not just the UK. It is now 6+. Historically, whenever housing has reached this sort of multiple in the UK and elsewhere, it has crashed relative to earnings (i.e. there was wage inflation and/or a drop in house prices to bring it back to its long run average). Historically, there have always been those supporting your view. Historically, they have always been wrong. Of course, this time might be different, but then I'm not willing to fly in the face of such consistent historical patterns. Are you?!

Tuesday, November 28, 2006 12:08AM Report Comment

3. Headmelter said...

Well done the Nationwide, One customer with voting rights won't be voting to remain mutual at the next ballot!

Tuesday, November 28, 2006 02:20AM Report Comment

4. waitingfor hpc said...

Glorious sunshine seems like he is trying to convince himself. If a house was a fair price why do you need interest only mortages at all?
Why would you need better rates to get FTB's to take on the debt?
What happens if house prices rise by another 25% - do the maths on the mortage costs then.

I feel warmed by the comments of GS as he is obviously worried enough to be on this website.

Tuesday, November 28, 2006 09:03AM Report Comment

5. geed said...

GS; C'mon bring some facts into your arguments. The vast majority of posters on this site are well read and researched and warm to the task of defending their opinions. There is a great deal of data available suggesting that property is seriously over-valued in the UK. I am not going to reiterate what has been said on many occasions, but history is pointing to a correction.

It is entirely understandable if you are a property owner that a HPC would not probably be in your best interests - especially if you have a large mortgage, and this I/We can understand. Many of us could probably afford to buy a home in the UK at present but choose not to as we believe a crash/correction is on the cards, there are also others here who genuinely cannot afford to even think about buying a property in the near future. What we have in common is a shared astonishment at the rate of HPI over the last 6-7 years.

"Perhaps property was cheap until recently where it is now just value for money?" Perhaps they will find a cure for cancer tomorrow. Perhaps HPI will run into double figures for the next few years. Perhaps these next few years will see 40% of the value wiped off UK residential property. All these statements are worthless unless backed by facts, figures or evidence (anecdotal or otherwise). There is plenty of data supporting the latter but I've not seen much evidence supporting your arguments..... Perhaps you could find me some.

Tuesday, November 28, 2006 09:44AM Report Comment

6. denzil said...

Troll alert:
Just ignore it, they eventually get bored and move on.

As for the article Nationwide must be feeling the pinch in the new customer market.

Tuesday, November 28, 2006 11:12AM Report Comment

7. Steve1 said...

As an a fully paid up member of a Nationwide Mortgage I received a letter last week offering me more mortgage debt. As a preferred customer. Game nearly over as we enter injury time.

Tuesday, November 28, 2006 11:29AM Report Comment

8. inbreda said...

I agree with Denzil, GS is a troll. He is quite obviously not a serious poster. Unfortunately he is not a friend of Devils Advocate, who at least tries to support his argument with evidence. Best to ignore GS

Tuesday, November 28, 2006 12:22PM Report Comment

9. millard said...

GS: aka Glory Hole

After your comments last night slating people for reading this and posting while at work, as well as continuously implying that you work considerably harder/longer than everyone else I hope you are planning on working late today, after all with your average 65hr week...

ps I'm on my lunch break.

Tuesday, November 28, 2006 01:01PM Report Comment

10. bidin'matime said...

The sad thing is that people like GS dont realise that a fall would actually be in their interests, as they would be able to afford a nicer house! As it is, he's probably stuck in a grotty little place for the forseeable.. (okay, I admit it, those adjectives were chosen to wind him up!)

Tuesday, November 28, 2006 01:30PM Report Comment

11. tyrellcorporation said...

You're spot on Bidin'. As Evan Davies so eloquently put it...

..can't quite believe this piece is over 2 years old... GGnnnnaaaarggghhhhh!

Tuesday, November 28, 2006 05:12PM Report Comment

12. glorious sunshine said...

I have never said I think high house prices are a good thing. Why do you think I do? If they fell it would be good as everyone could get better homes or if already priced out now would be able to get on to the ladder. Plus everyone would pay less inheritance tax eventually.

Sadly though it will not happen as there is an incredible mass of people out there gagging to buy.

Property is not a home as many of you think and never has been. A home is purely a tax free savings vehicle that you can live in as a bonus. Whether you realise it or not, this is why you all want to buy eventually. As if you dont, you will always be a slave to your landlord isnt that as good a reason as any to buy?

Doh forget the 3.5x earnings calculator if you use that it would be cheaper to buy a house than rent it! That can never be.

Millard I merely asked did any of you lot work. Maybe you and a few others are on breaks but surely not ALL day if you check some of the other posts. I obviously touched a cord with you.

As for future prices, they will go up but in single digit figures for another 3-5 years unless inflation takes off - the evidence is all around us - can't you see it?

Tuesday, November 28, 2006 07:04PM Report Comment

13. sold 2 rent 1 said...


Glad to see some sensible arguments from you now.

The point that most people on this site subscribe to is there will be no HPC without a recession. When the economy is growing strong then house prices will rise, and usually above earnings.

The real issue is that we have seen no evidence that the cycles of boom and bust in UK/world economy has ended. We have seen a 10 year expansion financed with credit. At some point this credit boom will turn to a credit crunch. It is happening in the US right now.

Another year and the UK will be in the same position.

The minor factors against HPC such as immigration and housing shortage dont have much of an impact compared to a recession

There is only one way to avoid HPC inflating out of the situation.

Only time will tell to see who wins the inflation v deflation debate.

I think we may only see a 20% drop in real terms; so not as bad as the 1990 crash.

The US will dictate what the world IRs will be. If the US decides to crash the dollar and inflate out of the mess then the rest of the world will follow suite. Look at the pressure that the euro is under at the moment.

Tuesday, November 28, 2006 07:41PM Report Comment

14. nearly30 said...

Glorious - you make a fine point - I think i'm understanding you a bit more each day.

Nevertheless - I think there will be a HPC - and a big one at that.

Much with many things NL has promised over the last 10 years - it's all a con.

Can't see how beneficial it would be for a load of investors to buy-to-launder - where's the investment in that?

A house is only worth as much as someone is willing to pay for it. Will the market be a constant carousel of buy-to-launders selling to other buy-to-launders? I doubt they will get much of a return from renters? FTBs won't be there either!!!

But a lack of FTBs won't cause the crash - more the economy - on paper UK PLC looks pretty sh*t at the mo - but no-one sees it as we are buried under a pile of 'fake' wealth called debt - caused by a bunch of over-eager MEWers and Card junkies!! And how are they going to pay that back to the banks - by tightening belts!!! Yes there has been an inflation of a debt bubble (including HPI) - but it will not and cannot continue - I say 2007 is it!!

How big - i'm guessing 1920s stylee!!!

Some cyclic info (for those who might be interested - faces change but the story is the same)

1920 Japanese economy enters a chronic depression
1922-1923 Germany suffers from hyperinflation
1924 US Federal Reserve System adopts easy money policy
1925-1926 Florida land boom
1925 Britain returns to the gold standard
1928 France returns to the gold standard
1928-1929 Stock Market boom in US out-of control
1929 The Great Crash
1929-1930 The Great Depression

Tuesday, November 28, 2006 08:02PM Report Comment

15. millard said...

GS - "A home is purely a tax free savings vehicle that you can live in as a bonus. Whether you realise it or not, this is why you all want to buy eventually." Thats a rather calus way of looking at it and makes assumptions about the populations motivation matching yours. I am indifferent about buying and base my current decision on simple financials i.e can I rent for less than interest only mortgage costs? This suits me for the time being, however, my wife wants to buy for a number of reasons (being able to decorate a nursery is somewhere near the top of the list), basically she wants the stabliliy of somewhere to call home without wondering where we will be living in 6 months as the landlord plans to sell etc....

"As if you dont, you will always be a slave to your landlord isnt that as good a reason as any to buy?" Now thats a different arguement and why buying at the right time is important, buying now doesn't exaclty seem a great idea unless you want to be a slave to a bank (aka landlord) for 50years+.

"Doh forget the 3.5x earnings calculator if you use that it would be cheaper to buy a house than rent it! That can never be." well it has been a number of times in history... and history does have a tendance to repeat itself.....

"As for future prices, they will go up but in single digit figures for another 3-5 years unless inflation takes off - the evidence is all around us - can't you see it?" can you clarify this statement, what do you think will happen if inflation takes off? what do you think inflation is currently at? do you think CPI or RPI are accurate?

Yes you struck a cord with me, I think I work bl00dy hard, but i would not compare myself to others on this site as I have no idea of what they do, please remember that your average HPC poster is unlikely to be one of the "wont work, cant be arsed to work brigade", its hardly a celebrity gossip site....

Tuesday, November 28, 2006 08:35PM Report Comment

16. glorious sunshine said...

Have I done something wrong???

sold 2 rent said some sensible arguments from me! Yes, me!

And nearly30 saidyou make a fine point!

How bizarre!

Well sold 2 rent, you recon a 20% fall do you? If so after a 7%+ rise this year alone and assuming you are paying rent now, how much do you recon your going to make in and % after you buy at the perfect time (future bottom of the market) ? What time scale are you looking at? And, before you answer the last one, remember you will be X years older too. Is it really worth the risk? Surely, you would be better setting up a business in that time?

NL? I like your thinking nearly30. At least Maggie was relatively honest compared to this lot!

But, fundamentally, prices will not fall in terms. If it is 200K now, you wont buy it for much less anytime in the future. You are still better off buying.

You need to look at the big picturebut not too big 

Tuesday, November 28, 2006 09:05PM Report Comment

17. glorious sunshine said...


It all depends on how much cash v loan you have as to whether you have a 5 year loan, 50 year loan or are mortgage free! If your debt is peanuts or nothing, who cares a sh*t what prices do while there is a poor sod giving you money to live in it!

I feel a california girls moment coming on...forgive me,

Well East coast girls are hip
I really dig those styles they wear
And the Southern girls with the way they talk
They knock me out when I'm down there

The Mid-West farmer's daughters really make you feel alright
And the Northern girls with the way they kiss
They keep their boyfriends warm at night

I wish they all could be California
I wish they all could be California
I wish they all could be California girls

The West coast has the sunshine
And the girls all get so tanned
I dig a french bikini on Hawaii island
Dolls by a palm tree in the sand

I been all around this great big world
And I seen all kinds of girls
Yeah, but I couldn't wait to get back in the states
Back to the cutest girls in the world

I wish they all could be California
I wish they all could be California
I wish they all could be California girls

I wish they all could be California
(Girls, girls, girls yeah I dig the)
I wish they all could be California
(Girls, girls, girls yeah I dig the)
I wish they all could be California
(Girls, girls, girls yeah I dig the)
I wish they all could be California
(Girls, girls, girls yeah I dig the)

I feel better now :-)

Tuesday, November 28, 2006 09:19PM Report Comment

18. millard said...

I can only assume your financial skills are as honed as your debating skills, any fool can make money in a rising market.

rental on a 200k prop = approx 8kpa which is taxable, any growth in the house price will only be realised when you sell. But what happens if prices stagnate and inflation continues at current rate??? at the moment the real rate of inflation is probably on par with HP growth therefore cancelling each other out, If i was investing 200k i'd want a better return and at least some form of diversification and by that I don't mean btl in 2 different cities...

Question, why do you frequent this site? assuming you really work 65+ hours a week, is your life really that empty that you need to come on hear and gloat in your free time. I think I feel sorry for you, there is a lot more to life than being smug.

Tuesday, November 28, 2006 09:43PM Report Comment

19. glorious sunshine said...


Sour grapes or what!

I don't care a sh*t for my debating skills and making money in any market including a rising one is, simply making money!

8K on a 200K property? Your obviously not in the best part of the country! As I said on one of my first ever posts, tenants are selling body parts just to rent around here. Tax? Well it depends on how good your accountant is...the rollling stones have a good one, 2% tax on their lifetime earnings! even Bono from U2 sacked his in favour of the former.

Why do I frequent this site? Well I would be a fool to give all my secrets away!

Where are you to get only 4% gross return?

Tuesday, November 28, 2006 10:44PM Report Comment

20. d'oh said...


Yes, at 3.5 times salary the interest on a mortgage is cheaper than renting, but this is as it should be as one is taking a risk in tying oneself to a significant debt. There are, however, costs to owning and letting that mean the headline rental rate is not what you "earn" so a straight-forward rental versus interest calculation is not approporiate. A more realistic earning is about 50-60% of the rental income (allowing for repairs and vacancies etc.). From this perspective, in a static housing market, BTL currently looks like a bad investment relative to , say, putting ones money in a savings account. I think there are fundamental aspects of the length of human working lifetimes that imply that houses should be worth about 3 to 4 times yearly salary. We stray from them now, but it means people will not be able to save for pensions, afford to have children etc, so the elastic band will spring back eventually.

Your point about heading towards a feudal/Victorian society is a good one and over the past 25 years western nations seem to be heading to a much higher variance "winner takes all" society. Having said that, house/land price booms and busts also occurred during the 19th century, the 18th century and part of the 17th century so... They've happened in the US, and Australia with regularity. Perhaps something has changed this time, and I can point out varioius reasons as to why you might be correct, but I also know that this has always been the case - whenever it has happened in the past people have come up with reasons as to why it is different this time. Recall the dot com bubble and the last HPC in the UK...the reasons given then for the uniqueness of the situations also seemed plausible.

My prediction is that we will see a drop in actual house prices but not 40%, as the real drop in house prices will be hidden by inflation. The CPI/RPI do not give a good indication of only has to listen to the radio/read the papers where everything is rising at a rate greater than inflation...a completre absurdity. The government and the banks are beginning to run out of wriggle room and at some stage the game of musical chairs will end.

Tuesday, November 28, 2006 11:01PM Report Comment

21. bidin'matime said...

I looked closely at BTL about 5 years ago and concluded that it was too risky a business - having seen interest rates in double figures most of my life, I worked on 8% and wouldnt look at anything that yielded less than this, after allowing for costs, including realistic allowance for long-term maintenance costs, and possible void periods. Result was that I didnt buy anything. Now, any fool can work out that I could have made a big capital gain in the years since had I gone ahead, but I was looking longer term. The problem is that the BTL brigade are not looking long-term. Oh, they say they are, and they will stress this even more as their losses mount, but they are not motivated by any serious analysis of the long-term prospects, but by having seen others achieve silly capital gains in recent years. They've completely shut their eyes to the interest rate risks, to the maintenance costs and the costs and hassles of collecting rents, finding tenants, etc. In short, they are jumping in feet first with their eyes firmly shut.

Sure, I could have made a fortune had I foreseen the bubble, couldnt we all, but theres no point in looking back Id have been too stressed out worrying about when the bubble would burst anyway, even a few years ago. The fact that I brought experience of 20 years in business to bear on making my decision and decided against it, makes me even more sure that this bubble will burst and return us to where we would have been had it not been for the bubble - which I'm guessing is back to prices of about 5 or 6 years ago.

Oh, and in case you think I'm a bitter old bugger living in a bed-sit, don't worry - as I write, I sit and look out over the balcony at boats in the marina (although unfortunately my yacht is in a different marina), living in a house that I could have paid for cash, but costs me less in rent than the net interest I get on the capital invested (from the sale of a cheaper house!). I realised that if someone was going to pay me silly money for my house, I might as well accept it and enjoy waiting for the bubble to burst.

So, GS, I too enjoy singing along to the Beach Boys (and dancing, with my wife, in my rather spacious lounge, as I seem to have more time on my hands now I dont have the DIY), looking out on all those poor fools who, like yourself, seem to think that house prices can rise forever. Life (and a degree in economics and a career in finance) has taught me to recognise when something is unsustainable and, take it from me, house prices at their current levels are unsustainable. It is a bubble and it will go pop.

Tuesday, November 28, 2006 11:03PM Report Comment

22. p. doff said...

You can say one thing about Glorious. His wind-ups generate considerably more blogs as bloggers rise to the bait. I'm beginning to wonder whether he's a mole who has something to do with increasing the popularity of this site!!!

Tuesday, November 28, 2006 11:57PM Report Comment

23. sold 2 rent 1 said...


I already have an internet business that pretty much runs itself (after 4 years of hard graft) and generates 140K a year

I have 2 properties in Turkey which I will keep as a long term investment (as they are too gorgeous to sell and still have big potential)
My wife and I are selling the UK and Dublin houses (which have increased 4* and 6* respectively) - these sales will go through soon

Its all about having a balanced portfolio. Too much exposure to property is a big risk

If prices rise next year at 6%. Once you have taken account of RPI at 4% and maintenance costs at 1-2% there is not much left in real terms
People forget that it's the land price that increases - the bricks and mortar side always devalues

If prices fall by 5% in one year, then after inflation and maintenance costs this is equal to a 10% decline in real terms

Will probably look to buy in 2010.
Am investing in commodities and gold stocks to balance the risks

Also, buying now when there is nothing decent coming on to the market (sellers market) means you end up not getting what you want but what is available.
It's a double whammy - high prices and poor selection.

Wednesday, November 29, 2006 11:29AM Report Comment

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