Tuesday, February 6, 2007

Don’t take out a big mortgage

Merrill sounds alarm on global liquidity

"it's going to be a soft landing or a hard landing, but the bottom line is that we face a landing,"

Posted by sovietuk @ 09:24 AM (948 views)
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26 thoughts on “Don’t take out a big mortgage

  • Well I am not going to listen for one … shall I take out a 5x or 6x mortgage? or perhaps I will certify it myself… LOL

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  • Best quotes

    “Britain is now one of the most heavily indebted countries in the world, leaving little scope for equity growth. Total loans amount to 162pc of GDP, compared with 111pc in the US and just 27pc in Poland. “The UK is going to struggle,” said Mr Chaudhry.”

    “The rate has since plummeted to around 10pc, and may have further to go. Mr Chaudhry said the suddenness of the fall matters more than the absolute level, typically serving as a warning signal with a lead time of 12 to 18 months.”

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  • “We can debate whether it’s going to be a soft landing or a hard landing, but the bottom line is that we face a landing,” said Mr Chaudhry.

    Without placing his bets on hard vs. soft, I think he’s made plain which the favourite is.

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  • dohousescrashinthewoods says:

    “Global liquidity – the monetary juice that fuels the system – reached a peak growth rate of 22pc at the end of 2005, even higher than the 15pc peak just before the dotcom bust in 2001.”

    So the current bubble is significantly bigger than dot-com?

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  • dohousescrashinthewoods says:

    “The UK is going to struggle,” said Mr Chaudhry.

    “Economic stability” says Gordon Brown.

    “stability my foot” says Dohousescrashinthewoods.

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  • And still the BTLers keep coming, like lambs to the slaughter.

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  • waitingfor hpc says:

    where is nohpc?

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  • nohpc? Quietly morphing into yeshpc.

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  • dohousescrashinthewoods says:

    Glorious Sunshine’s singing voice is a little horse too.

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  • dohousescrashinthewoods says:

    or is that a little donkey?

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  • At least glorious and nohpc won’t be able to claim they weren’t warned.

    Unemployment figures are UP

    wage rise demands are UP (paving the way for more interest rate hikes)

    interest rates (being offered by mortgage lenders) are UP

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  • I think they’ll make an appearance on rate day, esp if there isn’t an increase.

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  • glorious sunshine says:

    They will not fall by much if at all and in 3 years time they will certainly be higher. Who wants to rent on that basis? It is always better even in a falling market to buy rather than rent – something you lot dont understand. Keep dreaming in never never land HPCers. I’m off for some fun in the sun!

    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)

    🙂

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  • The Capitalist says:

    Just come back from Eastbourne. Good grief they have rebuilt the place on the front with hundreds ( I mean hundreds) of flats (or apartments as the EAs prefer). Who the hell lives in em all? Many appeared empty. Many are BTL. Landlords can’t pay the service charges and so give up on being a landlord, but hang on, there are more fools buying in (bigger fool theory) but this will stop soon.

    Yes there are facts about the HPC but one thing you can’t predict is SENTIMENT – once it changes to FEAR from GREED then you has Jazz I mean HPC.

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  • > It is always better even in a falling market to buy rather than rent – something you lot dont understand.

    Sound logic there. WTF?

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  • glorious sunshine says:

    Hey dude…the capitalist…I like Jazz too! Bring on the confusion…just to clear the air, remember Simba it’s our little secret…sssh, they always go up. Keep it under your hat and use your knowledge wisely.

    As far as Eastbourne goes, who would want to live there anyway! All I know is demand is strong here where I am and there are plenty of unfortunates prepared to sell body parts just to rent here! Crazy I agree but life is like that sometimes.

    Davros, forgive my ignorance ref: WTF however, just to back up my statement…person ‘A’ buys a property and it drops 20% over 5 years. His friend, person ‘B’ rents instead for 5 years then buys on a 25 year mortgage 20% less. Who is better off? Its person ‘A’ because they have the security of living in their own home and only have 20 years to go where as his friend is just starting on a 25 year journey and has paid someone else’s mortgage for 5 years! The only reason not to buy is a) your have already and are mortgage free or b) your living rent free with mum and dad or c) back packing travelling the world. Renting is definitely the loser’s option and a definite no no. I know because I am living off the back of such saps!

    Surf is up!

    I want my BTL

    Now look at them yo-yo’s that’s the way you do it
    You play the guitar on the BTL
    That ain’t workin’ that’s the way you do it
    Money for nothin’ and your chicks for free
    Now that ain’t workin’ that’s the way you do it
    Lemme tell ya them guys ain’t dumb
    Maybe get a blister on your little finger
    Maybe get a blister on your thumb

    We gotta install microwave ovens
    Custom kitchen deliveries
    We gotta move these refrigerators
    We gotta move these colour TV’s

    (See the little faggot with the earring and the makeup
    Yeah buddy that’s his own hair
    That little faggot got his own jet airplane
    That little faggot he’s a millionaire)

    Gotta install microwave ovens
    Custom kitchen deliveries
    We gotta move these refrigerators
    Gotta move these colour TV’s

    I shoulda learned to play the guitar
    I shoulda learned to play them drums
    Look at that mama, she got it stickin’ in the camera
    Man we could have some
    And he’s up there, what’s that? Hawaiian noises?
    Bangin’ on the bongoes like a chimpanzee
    That ain’t workin’ that’s the way you do it
    Get your money for nothin’ get your chicks for free

    We gotta install microwave ovens
    Custom kitchens deliveries
    We gotta move these refrigerators
    We gotta move these colour TV’s

    Look a’ here
    That ain’t workin’ that’s the way you do it
    You play the guitar on your BTL
    That ain’t workin’ that’s the way you do it
    Money for nothin’ and your chicks for free
    Money for nothin’ and chicks for free

    Money for nothin’ and your chicks for free

    Look at that, look at that

    Money for nothin’ and your chicks for free
    I want my, I want my, I want my BTL
    Money for nothin’ and chicks for free

    (Fade)
    I want my, I want my, I want my BTL

    Enjoying life to the full 🙂

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  • hey glorious sunshine stop with the lame surf speak you sound like a dick, by the way there is another reason not to buy which is not being able to afford a mortgage which unfortunately is the position I am in, I CANT BUY A HOUSE do you understand this.

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  • glorious,

    Your figures are rubbish.
    Person B is the clear winner.

    Person B will probably be able to take out a 20 year mortgage because the property is 20% cheaper.
    Person A will have paid very little off the amount borrowed and so will be in negative equity.
    Most of person A’s repayment is “rent” to the bank.

    Owning any asset that falls 20% is bad.
    It doesn’t matter if it is stocks, property, gold, or tulips

    I detect a change of sentiment
    “They will not fall by much”

    Renting has been a loser’s game for the last 14 years.
    The next 3-4 years is very likely to be a different situation

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  • glorious,

    The only reason not to buy is c) back packing travelling the world
    You are wrong on this point too

    I went backpacking in 1996. When I came back my house had gone up 25%.

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  • glorious sunshine says:

    sold 2 rent,

    Your views may or may not come true. However, can a ‘normal’ joe bloggs afford to take the risk of missing out???

    If you did indeed go back packing either a) your rich and can afford it or b) you sensibily rented your ‘home’ out while doing it!

    If the later, your in the ‘brotherhood’ brother!

    You lot keep spouting on about corrections but I still stand my ground that they will be higher in £££ in 3 years time and will fall a maximum of 5-7% in good locations which quite frankly looking at the big picture is peanuts AND means they will only drop back to 2005 prices!!!

    Remember, they will bounce back even higher in 3 years.

    I am beginining to wonder if they will drop at all now though looking at that graph on the HPC home page. They have been correcting without ANY drops in £££- only going up slower.

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  • What are you talking about??

    I rent a £300K house for £1000 a month. If we call a crash 20% over 3 years, I save £60K, which over the lifetime of a mortgage will be just over double that. So let’s say the total is £130K, not taking into account the cost of owning a home, interest on my deposit etc. etc.

    So from my calculations, I’d end up £100K better off from waiting for 3 years.

    Though according to you, there’s never a bad time to buy a house?

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  • Given that the majority of people on this forum have been so phenomenally bad at calling (and selling at) the top of the market it’s highly likely they’ll have an comparable success rate when calling the bottom.

    As a relative said to me in 1996 when I congratulated her on the purchase of a flat, “thank you but I think I’ve really missed the market.” !!!!

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  • Glorious,

    It is nice to get a sensible debate going at last.

    You are right to mention risk. “Joe Bloggs” has to balance the risk of missing out on not getting on the ladder and missing out on potential gains with the risks of negative equity and/or repossession if he can’t afford his mortgage.

    With house prices overvalued on almost every method of calculation and interest rates rising, the risks have to on the downside.

    I did rent my house out when I went travelling. I personally don’t have a problem with the BTL community. Most things that involve free market capitalism are fine with me. Who is to say that prices wouldn’t have gone this high with normal “homeowner” purchases anyway.

    Remember markets tend to overshoot in both directions. On the way up and on the way down.

    Most HPCers arguments rely on a recession to cause the HPC. Whilst the economy is strong it is sometimes hard to believe that we could enter a recession.

    Think about how the economy (world and UK) changed between 1999 and 2002. And between 1988 and 1991.

    I remember watching a program in 1987 (I think hosted by Norman Tebbit) about the UK economy – Miracle or Mirage. There was a huge debate at the time. Look what happened in the next 3 years.

    I think most BTLers won’t sell unless they are forced to. The biggest single reason is CGT. Nobody wants to give GB 40% of your profits. If you are a BTLer and your plan is to have property for 20 years then selling and buying back may not be worth your while even if prices fall 25%. The problems occur when the rent doesn’t cover the mortgage.

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  • monty,

    You must live in or around London.
    I remember a girlfriend in 1997 saying that prices had gone to high and that she would wait for the next crash before buying.

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  • glorious sunshine says:

    Davros,

    You have more money than sense! If I could rent Buckingham Palace or Windsor Castle for 1K a month I would not touch it as it’s a waste of my money unless I could sub let to offset that 12K per annum. People like you are very dangerous on these message boards spouting out advice to the vulnerable. You should carry a health/wealth warning on all your dud advice.

    Do you realise there are many people out there earning far less than 1K per month reading your crap and acting on it?

    You’re living beyond your means in a property you can not afford.

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  • You’re a smart bloke, you seem to know everything about me from a post on a notice board.

    What colour underwear am I wearing today?

    Oh, you haven’t disputed my figures Einstein.

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