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Just thought this was worth throwing into the mix for those who think the current situation is either a) sustainable b) a positive for the wider population and wider economy. ITEM CLub generally well-respected.
[url= http://www.ey.com/UK/en/Issues/Business-environment/Financial-markets-and-economy/ITEM---Forecast-headlines-and-projections ]E&Y ITEM Club[/url]
A couple of interesting highlights
'Supply and demand' or deliberate policy?
It seems clear that the low interest rates and high equity prices engineered by central banks in response to the financial crisis have encouraged households to invest in housing rather than low-yielding financial assets.
'Note use of the term 'social cohesion' - do you think angry, skint, Millennials are going to ruin their lives with heroic amounts of debt to fund the retirements of the older generation or are they going to just refuse to play the game and refuse to pay your asking price?
And 'financial stability'... can we actually afford another bust?
in our view the high level of house prices relative to income does pose a risk to financial stability. Affordability also poses a risk to social cohesion, threatening to lock younger generations out of the housing market.
This is also interesting, as I've not seen reference to it before. The banks and pension co.s are now complaining about superlow interest rates - for the banks it means they can't cover their costs when they lend money out and for pension companies it means they can't meet their liabilties ie: pay our pensions. But this reference to the banks wanting less money going into property is not something I've seen before. IIRC the banks got what they wanted in 2008...
The British love affair with property remains undimmed. Investing in homes was by far the most popular investment choice last year – perhaps unsurprising given the continuing low interest rate environment we’re living in. The financial services industry will be watching this flight to bricks and mortar with alarm given the negative knock on effect this has on their assets
Whilst I appreciate all the analysis the reality on the ground in my specific area there are only a couple of decent properties available and they are available for silly prices. I've broaden the search area by 30 miles and it's the same. We've saved and planned have substantial equity and savings, I am not some numpty just borrowing as much as I can....frankly a decent family home on a decent wage is looking like a pipe dream without a massive mortgage
It is possible to pick up 10 year fixed at 2.99% so bank analysts aren't expecting rates to be changing drastically in the next decade.
I'm mid-application for a Lifetime discount mortgage (3.69% discount off the SVR) which currently works out at 1.95% with no early redemption fees.
We are taking some equity out to extend the house, leaving a mortgage of 340,000 over 18 years. The payments are 20% of our joint salary.
in our view the high level of house prices relative to income does pose a risk to financial stability. Affordability also poses a risk to social cohesion, threatening to lock younger generations out of the housing market.
What do they mean "threatening to", it's already happened in the South East!
It is possible to pick up 10 year fixed at 2.99% so bank analysts aren't expecting rates to be changing drastically in the next decade.
Nothing to do with what they think, just a function of their funding cost for that period, you could argue it is what the market thinks though.
I just took out a mortgage yesterday to buy my mum a house - 120k at 1.95% on an offset. I did get a decent discount and there was a 995 quid fee but I thought that it was quite sharp.
If I pay off an extra 10% a year and have 8 years left repayment, how many years will that shrink to? My guess is 5 painful years. Is this correct?
[url= http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator# ]found the answer[/url]