Reply to: Mortgage Payments

[PM-Junkie]

How do you work that one out Cyberman? The reason for the currently high house price is due to low interest rates. If we get the high interest rate scenario that AtW suggests (and I think this is a possibility too) then it will mean that mortgages are a lot more expensive and this will keep house prices low, not cause them to rise. We are more likely to have high inflation on household goods but not necessarily house prices...

Oh dear, I guess cybertory is showing his ignorance of economics again. A shame the ignore function doesn't stretch to quotes.

The basics, as most people with more than one brain cell can understand, are that a change in interest rates affects the value of assets such as house and share prices. Higher interest rates increase the return on savings in banks and building societies, and this usually encourages savers to invest less of their money in property and company shares. This inevitably reduces the demand for these assets, and any fall in demand is likely to reduce their prices. Conversely, lower interest rates have the opposite effect, ie they tend to increase asset prices.

Plenty of empirical evidence of this - ie it's only been happening for most of the last 50 years. Of course, that was when the banking system works - and if they don't get it working again within the next 6 months people will have a lot more to worry about than the relationship between interest rates and inflation. What we see at the moment is lower interest rates not having any impact on the fall in house prices, largely due to cash flows all but stopping.

Pretty basic stuff, but clearly it flies over cybertory's head...and anyway this doesn't apply in his own unique little economic world where house prices are still going up. Apparently.

[Cyberman]

How do you work that one out Cyberman? The reason for the currently high house price is due to low interest rates. If we get the high interest rate scenario that AtW suggests (and I think this is a possibility too) then it will mean that mortgages are a lot more expensive and this will keep house prices low, not cause them to rise. We are more likely to have high inflation on household goods but not necessarily house prices...

If interest rates are at 10% it means that inflation will be running very high. The 10% inflation was just a 'guesstimate', but of course it could be much higher. House prices would tend to follow inflation in 'normal times', so it would be better to have your money in houses rather than cash.

[ferret]

When UK inflation really kicks in (imported due to weak pound) BoE rates could go up to 10%+.

I agree, but that means that house prices will also be rising by at least 10%.

How do you work that one out Cyberman? The reason for the currently high house price is due to low interest rates. If we get the high interest rate scenario that AtW suggests (and I think this is a possibility too) then it will mean that mortgages are a lot more expensive and this will keep house prices low, not cause them to rise. We are more likely to have high inflation on household goods but not necessarily house prices...

[AtW]

All of us on this forum know you're not the brightest, but it doesn't take much brains to realise that if you pay people 30-40 Euros per hour (as they do in Germany) to screw together cars, that is not added value and is not viable in the long run.

People who screw together cars are in the UK actually - Japanese/French car makers do R&D in their own countries (like Germany) and outsource cheap assembly to the UK.

Either way what's this got to do with me renting a house? I do what's more appropriate for me and it seems rather retarded to think that someone who rents is somehow an idiot - it is this kind of thinking that got many people in trouble as they felt they had to buy.

[Liability]

All of us on this forum know you're not the brightest, but it doesn't take much brains to realise that if you pay people 30-40 Euros per hour (as they do in Germany) to screw together cars, that is not added value and is not viable in the long run.

HTH

well this is the issue - if you take a look at Germany and the other more developed countries the whole concept of Europe is even worse when it finally realises the state it is in - what happens then! What happens to the Reserve of Euros!

[SallyAnne]

Good for you SA!

Some of the guys here forget that a house is not always simply an asset, sometimes it's a home too!

Bought our house/home 10 years ago. What's it worth in this current economic climate? Dunno. Don't care!

What will it be worth next year?

Dunno, dont care.

In 5 years (or less) it will belong to us and we'll live/mortgage rent free. What will it be worth then?

Dunno, don't care. We'll have a roof over over heads and one we really rather like!

That's so cool!

[sasguru]

most of UK economy (thanks to them and successive Govts) now is a service based sham.

.

All of us on this forum know you're not the brightest, but it doesn't take much brains to realise that if you pay people 30-40 Euros per hour (as they do in Germany) to screw together cars, that is not added value and is not viable in the long run.

HTH

[thelace]

I bought mine 3 years ago....actually, is it 4...this is our 3rd Xmas.

We went for interest only mortgage cause we're both contractors and didn't want to throw money away on repayment terms when we have always planned to pay the full whack off probably (hopefully) within the next 4 years.

Nothing to do with affordability really.

Good for you SA!

Some of the guys here forget that a house is not always simply an asset, sometimes it's a home too!

Bought our house/home 10 years ago. What's it worth in this current economic climate? Dunno. Don't care!

What will it be worth next year?

Dunno, dont care.

In 5 years (or less) it will belong to us and we'll live/mortgage rent free. What will it be worth then?

Dunno, don't care. We'll have a roof over over heads and one we really rather like!

[Liability]

No - sterling has deflated due to bubble of UK's financial economy bursting - finally the world called bluff on City style bulltulipers, most of UK economy (thanks to them and successive Govts) now is a service based sham.

As I said before - euro is now a reserve currency with all the advantages that come with this status - sterling is 2nd tier at best and it may get worse than that. The biggest risk now is going to be sterling dropping so long that it would be difficult to fix that rate once and for all as it would permanently shaft people with sterling assets.

ok you base a few things in a blase way which is way I beleive you are wrong

Take the state of the top 5 EU countries and now compare them to the UK

This should tell you why the EU will also go down the pan soon

[AtW]

Hark at the penurious financial expert pontificating from his rented bedsit in Brum.

Given house market collapse (still in early stages) it seems to me that renting was a smart option for me (especially given that I invested saved money into some better stuff than house price bubble).

[AtW]

BUT it has become this due to erroneous reflection in exchange rates.

No - sterling has deflated due to bubble of UK's financial economy bursting - finally the world called bluff on City style bulltulipers, most of UK economy (thanks to them and successive Govts) now is a service based sham.

As I said before - euro is now a reserve currency with all the advantages that come with this status - sterling is 2nd tier at best and it may get worse than that. The biggest risk now is going to be sterling dropping so long that it would be difficult to fix that rate once and for all as it would permanently shaft people with sterling assets.

[Liability]

A lot of City idiots laughed at prospects of that happening actually, but last 12-18 months has demonstrated that euro has become proper reserve currency and this will help eurozone a lot because euros are desireable. On the other hand attractiveness of 2nd and 3rd tier currencies that plunge in value is not high - Britain is turning into sick man of Europe for real.

BUT it has become this due to erroneous reflection in exchange rates. If you take the economies of the top 5 in the Eurozone what is the REAL truth..how long before that gets reflected in todays markets?

[sasguru]

Ok, good for you - it's not so bad as buying in 2008 or 2007.



Repaying debt early is always the best investment as it would save a lot, though if you use offset morgage in a way you achieve that while having liquid cash reserves.

Hark at the penurious financial expert pontificating from his rented bedsit in Brum.

[Turion]

Why would they even bother replacing the notes and coins? If UK enters at parity, you could keep the old notes and coins and perhaps con the people into thinking they still have the pound?

Standards, that's why. Because the ECB would have something to say about that, and euro currency would need to be accepted here and Pound notes would not be accepted, as now in euroland.

As in other countries the UK could issue it's own euro standard notes and coins that would be accepted elsewhere.

[AtW]

I bought mine 3 years ago....actually, is it 4...this is our 3rd Xmas.

Ok, good for you - it's not so bad as buying in 2008 or 2007.

We went for interest only mortgage cause we're both contractors and didn't want to throw money away on repayment terms

Repaying debt early is always the best investment as it would save a lot, though if you use offset morgage in a way you achieve that while having liquid cash reserves.