Anyone else here worried about the economy?

[unclened]

Not sure I get this. Most people who have fixed will have done so at a rate significantly higher than whatever their banks default rate is, so when the fixed term ends their payments will actually go down (assuming we don't get much in the way of interest rate rises in the mean time).

We fixed at the point we weren't sure which way interest rates would go and we've lost out financially from that decision as I've been paying about 2% more than is being charged for a tracker. We gained in peace of mind though.

What I meant was, people who bought in 2009, which was when the prices started rebounding, I believe a lot of them got 2-3 year fixed deals at rates around 1-2.5%. Seeing as we are only 18months in since that period, should a rate hike occur in the next 18months, it would only take a 2% base rate to take their repayments upto unaffordable levels. Its the same thing that happened in the US. People pushed the limit of their affordability on introductory rates. When the rate resets hit, those people got washed out.

If people were prudent and didnt push the boat out, then they will fare a lot better. I would always consider whether I can afford 5-6% even if the base rate was 0.5%.

 

[cambsno]

I'm not sure I agree to that. Whilst overall I think property is a good investment to have, the approach needs to be considered carefully.

In your example, say if you purchased with a 75% (liberal ltv compared to historic ltv's) loan and paid an average interest of 4% (very liberal estimate) throughout the loan.

Total repayment over 20years = 218,152.92
Less £50,000 deposit
market value = £150,000

Net loss over 20years = -£118,152. If you include what your £50,000 would have been worth if it grew at the rate of inflation over 20 years, your loss would be even greater.

Also, during those 20 years you could experience situations where your property in unlet (if you are an investor) or your circumstances force you to sell (through relocation, loss of job etc.). Thats why I don't believe anything in life should be a buy-to-hold investment.

Ok, but in reality it is highly unlikely house price would do that - house would probably be worth say £350k. In any case, at a grand a month you would have spent £240k in renting a house, so be £240k down. Even if you still had that £50k in the bank it would be close to £200k down.

If you lose your job you will struggle to pay rent too.

 

[unclened]

Ok, but in reality it is highly unlikely house price would do that - house would probably be worth say £350k. In any case, at a grand a month you would have spent £240k in renting a house, so be £240k down. Even if you still had that £50k in the bank it would be close to £200k down.

If you lose your job you will struggle to pay rent too.

agreed. i'm not arguing either side here. I just don't see the housing market recover to previous levels for a very long time. In heyday, monthly mortgage approvals were running at 85k. Now they are sitting at 40k per month. Thats a 50% drop. Interest rates are at their lowest ever... the only thing left to give way is prices.

 

[cambsno]

Like you said, it is very regional. A 2 bed down the road from us sold for £140k (list price £142k) within 3 weeks.

 

[david1701]

now who was being sensible

 

[wegotitugetit]

Mortgage approvals are at an all time low, the governments are willing to throw money out of helicopters. Where do the joe public like us go from here?

How are other people preparing themselves for the crash landing? :shrug:

this is why the market is in such a deep hole now

people are not spending there money in fear when they should be as it will only have a knock on effect with jobs because people wont spend

the market is slowy coming back i see this happening from the retail side and it is slow at the moment if people start spending things will get back on track quicker

and i jsut got a remotrgage 6 months back with no hassle i even have bad credit so banks wont lend untill you have the 10 % deposit thats where the figures are from

 

[unclened]

thought i'd revive an old thread, given the carnage in the financial markets recently (although a pulse was detected in the FTSE today!)

 

[Martyn...]

Why worry about what you can't control

and if you do control it, stop worrying about it and fix it

Spot on

 

[Chris Primadona]

Gold is at an all time high just now because of speculators looking for a safe haven during the recession, there is no guarantee it will climb any further, and if the economy improves it will fall in price.

Also you will have to make up the difference between the buying price and the selling price before you see a profit.

Just my opinion but I do not see it as a good idea at this time.

I have to agree here, I think it has just about peaked now and prob isn't as safe an investment as some people might think.

 

[unclened]

I have to agree here, I think it has just about peaked now and prob isn't as safe an investment as some people might think.

You'd be surprised how many times people have tried to call a top in the Gold market and been wrong. I think any hint of QE3 will certainly take it further.