stilover

I hope they don't. I worked/saved hard and payed my Mortgage off after 5 years and 3 months (£56k) and apart from the regular bills, my wage is all mine.

Theoretically, I'm worse off if the savings rates drop. I'm earning less interest, therefore I have less money.

Putting money away every month to buy a new house once the prices have fallen to normal levels. Hopefully in 2 to 3 years time.

EddScott

LCD? Ha Ha - you cheapskate!

MattW

Matteeboy

We could survive for comfortably about 15 years if our income stopped at current spending levels - which we keep low. If we had to, we'd rent somewhere cheaper. We run a PR firm - which is doing fine but could easily go **** up - see we are under no illusions unlike about 90% of the population. If earnings go up, we save more. If they take a dip, we spend less. You seem to be pretty confident that you are taking no risks at all. Hmm...

Oh and NL created this current climate - and will have put serious pressure on the BoE to "fix" it...

Ted Maul

giant mortgage here... I'm on a 2 yr BOE - 0.31% tracker which ends in June 09, and then it turns into a BOE + 1% for the life of the mortgage.

this cut of 1.5% just saved me £625 a month.

I predict that we will go through a similar stale period like Japan have, with interest rates falling to 1% late next year and staying below 2.5% for 10 years...but then I would say that wouldn't I

ps - I see 3m Libor cut to 4.49 from 5.56 yesterday
The spread dif between 1yr libor and 12m gbp swap vs SONIA was normally around 0.2 before the crunch, and we've seen this spread go to 3.2, so its going to take months before this comes down to even 0.7 which is what we saw at the start of 08. We'll never go back to the 0.2 days again, and so we'll never get such good mortgage deals anymore.

fast bloke

I don't think that I am taking no risk. I think I am taking a managable risk. Same as I do every time I get in the car, same as I do every time I eat something. If I said my mortgage was for 40k, would you think I am taking the same risks?

Basically, your view of acceptable risk is different to mine. That doesn't mean that one of us is right and the other one is wrong. I am comfortable with my situation, just like you are comfortable with yours, so I can't see why you feel the need to repeatedly point out that you are right and everyone else is wrong. (unless you have some kind of chip on your shoulder and can only accept the fact that everyone who doesn't follow in your footsteps is heading for disaster)

So how did labour cause the global recession?

Matteeboy

Fast Bloke - good points well made about perceived levels of risk.


Labour helped enormously - encouraged reckless banking tactics, bailed out the banks causing a huge increase in national debt, overtaxed fuel, encouraged silly mortgages and loans, stifled UK farming and manufacturing by getting into bed with supermarkets and over relying in imports, etc,etc. I actually support much of what they do but they really have helped this "issue" which although considered global, still could have been managed better on a national level.

MattW

Much of that is down to free market economics.

fast bloke

I hope so - thats my job

You could equally blame the whole thing on Maggy Thatcher - She started the right to buy process in the 80's. I bet most of the monster mortgages here belong to people in their 30's and 40's. These people grew up watching their parents being given the opportunity to own their own home. So from a young age we have been conditioned to think that owning your own home is an opportunity not to be missed.

Financially I would probably be much better off renting, but I don't want to for pretty much the same reasos that I prefer to be self employed rather than employed. Basically renting from a landlord and being employed by someone else would leave either the landord or the employer in control of the things which are important to me - home and income. Sure you have rights, but if it all goes **** up and your employer or landlord goes bust, you lose your home and your income anyway. At least this way I am in control of all that I can be, even though it costs me more.

It is nice to have some savings to create a buffer, but there has to be a point where you decide to spend it rather than keeping it all until you die. You can't take it with you you know.

(ready for the FB is a control freak replies now )

MattW

Never a truer word said (or typed ).

Matteeboy

I guess we can all justify the situation we are in - I just don't agree with mega debts and consumerism at all costs. If you can't afford it, don't buy it.

lozgti

Has the country ground to a halt because of the housing market going pear shaped?

How realistically is this 3% rate going to help? Can it perceivably start going up again?

MattW

No argument from me on that statement, however there are two approaches of "affording it".

1. save up until you can buy it outright
2. Take a loan of which you can comfortably afford the repayments

Of course for low end goods such as Tv's, then option 1 makes total sense, for cars, mortgages, home extensions, major improvements, then 2 can make more sense.

stilover

I'd agree with that. Just don't understand the mentality of British people at times. Billy Big Bollox bragging that he's just bought a 4 bed detached house for £650k when 7 years ago it was only £180k. If the housing market had risen with inflation then you wouldn't be is so much debt. Have more money to spend/save for things you want.

It's interesting driving round new housing estates. Owners have a brand new home, mortgaged to the hilt, and a piece of sh*t on the driveway as they can't afford a decent car.

I have no sympathy for anyone with 90%+ mortgages. They're all sh*ting themselves that there house isn't worth what they over payed for it in the first place. Sh*tting themselves that that great 2 year fixed deal they had is coming to an end, and the new repayments are more than what they can afford.

As Matteboy says. Don't buy what you can't afford. And that means if rates go up.

Jay m A

iTrader: (2)

So is it safe to say that its very likely the £ will weaken against the $ given this cut, plus the US election result?

CrisPDuk

That'll be some peoples' perception of me then

Our mortgage, at £90k, is roughly half the current market value of our very nice house (not new, but in a good neighbourhood), the drive contains (amongst others) an '88 Nissan Micra, and a '91 Golf 16V. Both of which I own by choice, not because I can't afford to buy anything 'decent'

However, when seen from my perspective, the house is still worth the same £500k that it was worth last year, and the year before that. Purely because since I have neither the need, nor the desire, to sell it, that is what it will cost somebody to acquire it from me

What most people forget, is that just like shares, you can only ever lose money on your house if you sell it for less than you paid for it, or less than you owe on it. If you still own it, you've neither lost, nor gained nothing

Matteeboy

MattW - the trouble is what anyone can "comfortably afford" can rapidly change. I'm sure there are many in jobs they thought were safe that are now out of work - it's happening very quickly all the time. These people haven't built any sort of safety net. Just spent spent spent. Suddenly £1000pcm for a mortgage is a lot when your £50k job goes to the wall and you are out on your ear.

What's happened is we've been buttered up into thinking life is about monthly payments - I know because I have done it. £280pcm on a car? No problem on my £45k salary (for example) - except that the loan is a high APR%, the car halves in value in two years so that comfy £280pcm is actually a £6k asset loss plus £4k in interest - a HUGE dent. Yes the payments seemed fine but the overall loss is huge.
Same with mortgages - pay interest only like so many do and you are paying a HUGE amount to the bank, and getting nothing for it unless it rapidly appreciates!

Anyway, rant over...

Matteeboy

Bravo - sorry but that is utter gonads.
Interest only mean you are only paying interest. Yes if that home appreciates (which isn't happening for some time to come) you make on it but if it depreciates you are taking a double hit.
Rents are usually lower (well down here anyway) than the equivalent mortgage. In the case of this place, rent is £1000pcm, interest only mortgage would be about £2500-3000pcm but the landlord owns it outright so is not affected by the current climate. Apart from the fact that this place is going down in value fast.

We get a lot in return - no worries, not large expenses on things like a broken boiler or roof (both been replaced recently), flexibility and a whacking great house in a huge riverside plot for very little money. I'd rather that went to a landlord that we get on with than a faceless near criminal bank.

fast bloke

So rent a house worth a million plus for a grand a month? That is good value.

EddScott

Certainly agree with some of the above but my mortgage is less than the equivalent rent round here. If I had somewhere else to live, I could make money on renting our place. We paid 48K, I've robbed it to 75K and even if the property drops by a third we are still in equity - ish

As you mention though, you don't have to pay for a completely new heating system like what I an facing next year if our boiler gets condemned

cookstar

iTrader: (6)

Surely £2500-£3000 PCM would not buy you a million pound house?

EddScott

The question is better asked would £3000 PCM get you a million pound mortgage.

The answer would be no but I think part of the problem we are in now is that the answer (up until the recent shenannigans) was YES YES YES.

Lee247

What you get in return, you do not own. You are giving 1k away for something that will never be yours to leave to your little one.

What we get, is our own property and land. A nice little legacy for our kids when we eventually kark it.

I very much doubt that property is ever going to be worthless, so I shall continue to pay my mortgage, happily

Matteeboy

A million quid?! More like £6-700k. 5 bed riverside house overlooking no houses 2 miles from a city in a very desirable (apparently) place with 5 acres - not been valued to guessing but it's worth a fair bit anyway. Yes it's a total bargain but we got lucky.

Bravo - are you on interest only or not? Because interest only means INTEREST ONLY. I.E. You are JUST paying interest to a bank without paying for the actual house itself. If not, then why answer? Interest only is the SAME as rent (i.e. doesn't pay anything off) except paid to a bank, not a landlord.

Yes yes 84 but that's called a REPAYMENT mortgage. What we get is a load of savings, no risk and a nice legacy to leave our little boy because we WORK for money rather than relying on a house to appreciate and get debted up to the eyeballs. Which the kids wouldn't be too happy with if daddy lost his job/company, lost his "owned" house and had it repossessed. I'd prefer not to risk our kids inheritence thanks.

Matteeboy

Well round here we are paying a lot less for rent than for an interest only mortgage while saving the difference - cash in the bank that doesn't rely on selling a house first. Plus prices are going to do a 1930s/70s depression this time - not a late 1980s recession "dip"

So it sounds like we are both fine.

Have a good weekend!

fast bloke

Assuming 10% deposit - interest rate of 3.79% as of yesterday.

900K would cost you £2915.00 per month on interest only. A 600k house would cost you about £1700 a month on interest only