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[i]Anyway, red, blue, yellow, they're all puppets to the likes of Rothschild!
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One of the best one-liners I've ever read on here. I was just thinking about the Rothschild story, yesterday.
You'd never get away with it now, of course...
Totally agree with the last post, especially
The only people that win if house prices stay high are the banks who tie you into a lifetime of debt.
There should have been a big correction in the housing market when the crisis struck 3 years ago. It didn't happen then because the governments around the world lead by Gordon Brown (so he claims) pumped money into them by quantative easing. There still hasn't really been a correction yet. We have seen falls in some areas, but prices are still too high.
Banks created the bubble by lending money they didn't have and governments made it easier for them to lend recklessly.
It's been a disaster allowing houses to become so expensive because you can't afford to move if you own a home and you can't afford to buy one if you haven't got one. The cost of ownership is far higher than the property's true worth.
The irony is that the 4% inflation figure announced today doesn't even include the cost of housing! It was the Conservatives that removed this many years ago. This makes the headline inflation figure almost completely meaningless. Inflation figures today are just a tool for deceiving people.
Young people have no chance these days, unless their parents earn a mountain of cash, or they are one of the fortunate few who get very well paid jobs. The rest will suffer a lifetime of debt and misery. My guess is that they will all rebal on day. It will be ugly!!
Totally agree with all you're saying spongebob, with the exception of the Tories taking housing costs out of the inflation measures. Happy to be corrected but I think it was Brown as Chancellor that switched from RPI to CPI in 2003 or thereabouts.
Ironically there are noises now about adding housing costs back into the measure. IMO this would be ridiculous as the housing market correction that must surely be coming would then help to keep the inflation figure lower. Ignore it on the way up and use it on the way down, a very convenient way to deceive Joe Public into believing that things aren't as bad as they really are.
The irony is that the 4% inflation figure announced today doesn't even include the cost of housing
I'm not sure irony is the right word - as I said in a somewhat tongue-in-cheek way above if you include HPI in the inflation figures it would currently reduce it, not increase it. There must be a strong temptation for the government and BoE to use this as a political tool, as demonstrated by the way Merv started to talk about including HPI in the inflation target in 2007 when it would have got him out of writing a few letters. The time to include HPI in the inflation target is after prices have corrected, not now.
Edit : Beaten to it!
[i]The irony is that the 4% inflation figure announced today doesn't even include the cost of housing! It was the Conservatives that removed this many years ago[/i]
[b]WHOA ![/b]
Thats utter twoddle. Gordon decided that he would move to using the CPI rather than the RPI. That happened on his watch. FACT !.
[i]In his Pre-Budget Report statement on [b]10th December 2003 Gordon Brown the Chancellor of the Exchequer [u]changed[/u] the Governments inflation target to a new base the Harmonised Index of Consumer Prices HICP which has been renamed the CPI[/b]. The level of the new CPI inflation target for the Bank of Englands Monetary Policy Committee MPC was set at a symmetrical 2 with immediate effect.
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That was Gordon Brown, its out there as fact, don't be pinning that one on anyone else other than Gordon.
🙂
Along with his time machine moment when he told everyone that we weren't where we thought we were the in the economic cycle, but that we were actually...somewhere else...
Ole GB was very tricksy, he was.
😉
house prices haven't dropped by much, in real terms, but in inflation-adjusted terms, they have. Below are some charts a guy called freetrader produces. They show that whilst prices have been broadly flat (a lot of wobbling, but not much either way) in the last 5 years or so, in real terms, in inflation adjusted terms they've dropped 25%. I think this is how things will continue - a 'freeze' in house prices for a decade or so will allow FTBs to no longer be priced out, whilst avoiding negative equity and the problems that go with it
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Why do we seem to be the only economy in the world that is based on house prices
If there had been tighter rules on mortgage lending we would all have been a lot better off, houses can only sell for what people can afford to pay
When we bought our first house we had to put down a 10% deposit and then could only borrow a strict amount based on our joint income.
How can people be buying on terms like an interest only mortgage or more than the value of the property
Madness and if the interest rate does go up its going to cause a lot of pain. Only goes to show that many people couldn't actually afford to borrow what they have and perhaps its the levelling exercise that needs to happen
interest only mortgauges can actually make sense. If you assume properties are going to increase in price by x amount (lets say 7% per year, on average). A interest only loan can buy you a bigger house, than you can without. After 25 years, the figures actually work out that you could sell the bigger house, that you've lived in the whole time, buy the smaller house you'd have been able to afford otherwise, and pay off the entire mortgauge with the money left over.
You are, obviously, gambling on prices rising. But it gives you a nearly 30% better house to live in for 25 years. Some would say thats a sensible investment
Prefer not to gamble with the roof over my head thanks, leave that to the Lloyds names and punters at the bookies.
All sounds good until you end up owing a fortune, bit like the poor sods who were sold endowment mortgages. The words we expect and should don't promise bugger all, like to know once the mortgage has finished the house is mine
Many of the 'poor sods' who took out endowment mortgages did very well out of them indeed. As always with investment, it's all a question of timing. Some won, some lost.
Exactly Mr Tall hence my not wishing to gamble, know which group I would have been in.
My old man always said never gamble unless you can afford to lose, afraid I can't
Interest rates will rise (possibly fairly substantially) at some point this year. The only question is will it be a Euro Crisis that preceeds the Sterling crisis, or Vice Versa. At the point the money markets decide that the risk of the UK defaulting on it's debts, or infact allowing them to inflate away, outweighs the potential return on investing in Sterling Merv will have no choice but to increase base rates.
This will, as predicted cause a further large correction of house prices, and a further dip in the economy as a whole.
Once this has all played out, we will be back where we were the last time the tories had to clear up the mess left by labour. The structural changes made by the next tory government (this one will collapse shortly after the sterling crisis, followed by a disasterous short term labour government, followed by a strong tory government that will have a proper mandate to really turn the screws(hopefully one with less toffs at the helm)) will allow us to rebuild, however the massive cuts to public services will become a drag and the population will forget why a massive public sector doesn't work and we will begin the whole cycle again.
And if my predictions are right, I'd like to emigrate please.
Ta ta then.
Ian
followed by a strong tory government that will have a proper mandate to really turn the screws
I can't wait. I mean the poor, sick, disabled etc are getting far too easy a time of it at the moment.
Why not leave now?
strong tory government
They couldn't even get a majority to replace a very unpopular labour administration so can't see that happening (thank god)