Interest rate rise - Page 3

Ianto.W. · 13-01-2007, 02:39

Quote:

entwistle, I've a lot of time for people who like us have had to start off with nothing and work their way up. You do have to be prepared to invest a bit of time and effort in things in life, mortgages are one of those things that the more you put in the more you will gain back

This is the only bit of sense iv'e read in this thread so far, it is the only place where money can be invested and incease with inflation, this is precisely what banks insurance companies and building societies do with 'your' money.

garinda · 13-01-2007, 03:08

Quote:

Originally Posted by Ianto.W.

This is the only bit of sense iv'e read in this thread so far, it is the only place where money can be invested and incease with inflation

Not necessarily. Lots of people were caught out when the housing market last crashed in the late eighties/early nineties. Unlikely it will happen again, but negative equity is always a possibility.

jedimaster · 13-01-2007, 05:16

Quote:

Originally Posted by garinda

Not necessarily. Lots of people were caught out when the housing market last crashed in the late eighties/early nineties. Unlikely it will happen again, but negative equity is always a possibility.

i'm not so sure the way things are going all warning signs are pointing to the possibility of a crash

WillowTheWhisp · 13-01-2007, 08:52

A lot of people lost their homes entirely when rates went sky high and they couldn't keep up the payments. My old boss always used to say buy the dearest house you can afford because back then you got tax relief too and he was always of the opinion that prices could only go up. He'd never known them to fall like they did and leave so many people with negative equity.

Ianto.W. · 13-01-2007, 12:05

Quote:

Originally Posted by garinda

Not necessarily. Lots of people were caught out when the housing market last crashed in the late eighties/early nineties. Unlikely it will happen again, but negative equity is always a possibility.

The people that were caught in the equity trap borrowed dear money, interest rates are as low as they have been in my lifetime, in 1964 they were 5/6 per cent it will never get any lower. Thatcher fueled inflation by incerasing interest rates, the only danger facing us at present is the easy to obtain credit cards with ridiculous rates of interest ie apr 29 per cent, mortgage money at 7/8 per cent is cheap, but as willow said if you buy the correct type of property 'not this modern wood framed crap' it will retain it's value through thick and thin times. If you sit on your backside worrying about crashes and failures you should not join the ranks of house ownership or go into business, be a nearly man instead.

garinda · 13-01-2007, 12:20

Quote:

Originally Posted by Ianto.W.

The people that were caught in the equity trap borrowed dear money, interest rates are as low as they have been in my lifetime, in 1964 they were 5/6 per cent it will never get any lower. Thatcher fueled inflation by incerasing interest rates, the only danger facing us at present is the easy to obtain credit cards with ridiculous rates of interest ie apr 29 per cent, mortgage money at 7/8 per cent is cheap, but as willow said if you buy the correct type of property 'not this modern wood framed crap' it will retain it's value through thick and thin times. If you sit on your backside worrying about crashes and failures you should not join the ranks of house ownership or go into business, be a nearly man instead.

That's fine, if yout property is worth the same, or more than you took out a mortgage on it for, or if you plan to stay in the property long term.

When I first bought after the last crash, lots of my friends were in negative equity, and couldn't afford to sell sell. They just had to sit and wait for the value of their property to rise again to what they paid for it.

Some wanted to move because they'd got other jobs. Some because they now had children and were in a one bedroom flat. One couple I knew got divorced, but still had to live together because they couldn't afford to sell and split the cash from their property, because there wasn't any.

Ianto.W. · 13-01-2007, 12:29

Quote:

Originally Posted by garinda

That's fine, if yout property is worth the same, or more than you took out a mortgage on it for, or if you plan to stay in the property long term.

When I first bought after the last crash, lots of my friends were in negative equity, and couldn't afford to sell sell. They just had to sit and wait for the value of their property to rise again to what they paid for it.

Some wanted to move because they'd got other jobs. Some because they now had children and were in a one bedroom flat. One couple I knew got divorced, but still had to live together because they couldn't afford to sell and split the cash from their property, because there wasn't any.

I take your very valid point garinda it does not work for everyone, but in the long run you can't lose on property, I have owned this property since 1964 but have not always lived here, I kept it as an 'insurance policy' which has now matured.

garinda · 13-01-2007, 12:40

Quote:

Originally Posted by Ianto.W.

I take your very valid point garinda it does not work for everyone, but in the long run you can't lose on property, I have owned this property since 1964 but have not always lived here, I kept it as an 'insurance policy' which has now matured.

I totally agree. If you are staying put, and don't have to move, negative equity isn't a worry.

I was very lucky. Twelve years after first taking out a mortgage, and three moves later, I was mortgage free. Still feel sorry for people who are struggling though. Salaries haven't risen anywhere near as much as the vastly inflated house prices. The market hasn't stagnated or crashed already because lenders now give mortgages for up to five times people's salaries, or for longer than the traditional twenty five years. Without first time buyers being able to get on the property ladder, the whole chain of house sales grinds to a halt.

Ianto.W. · 13-01-2007, 12:46

garinda as usual you have got the last word, as Rumpold said I rest my case

***Mr D*** · 13-01-2007, 15:37

Quote:

Originally Posted by garinda

Still feel sorry for people who are struggling though. Salaries haven't risen anywhere near as much as the vastly inflated house prices. The market hasn't stagnated or crashed already because lenders now give mortgages for up to five times people's salaries, or for longer than the traditional twenty five years. Without first time buyers being able to get on the property ladder, the whole chain of house sales grinds to a halt.

That the main struggle. and if you cant afford the fees involved in starting your morgage, inc a 5% deposit then you are really snookerd, I would love to buy my own property, but it would leave me struggaling to have a life. and be over 35 years.

panther · 13-01-2007, 16:05

I know what you mean mr D, me and my partner would love to buy our own house, something to leave the kids but as you say no cash for deposit so it looks like we have to rent until we have some spare cash!

SPUGGIE J · 13-01-2007, 16:23

At the end of the day lenders are having to lend more for longer in order to substain growth and profit. They dont give a hoot about those who buy this way and then through issues not of their own making start to struggle.