trendie

Legendary member
6,841 1,399
I am coming in a much lower level of knowledge, so bear with me...

With this "Help to Buy", with the government giving interest-free money for a couple of years to help people onto the property ladder, what happens after the 2 years is up, and the hapless home-owners have to pay the extra interest?
I mean, if they can't afford it now, why should they be able to afford it in the future?

And another thing, with around 1million on "zero-hour contracts", ie, no guarantee of work, how do lenders decide to lend, as the income of such people is zero, as they are not on a salary.

EDIT: I am long on handcarts, and investing in toll roads to Hell.
 

Atilla

Legendary member
19,821 3,091
I am coming in a much lower level of knowledge, so bear with me...

With this "Help to Buy", with the government giving interest-free money for a couple of years to help people onto the property ladder, what happens after the 2 years is up, and the hapless home-owners have to pay the extra interest?
I mean, if they can't afford it now, why should they be able to afford it in the future?

And another thing, with around 1million on "zero-hour contracts", ie, no guarantee of work, how do lenders decide to lend, as the income of such people is zero, as they are not on a salary.

EDIT: I am long on handcarts, and investing in toll roads to Hell.

I think these days mortgages are cheaper than rent.

In another two years people will have jobs and the economy likely to be in full flight. Like 1929 is history so will this recession.

On the economic cycle I guesstimate the next time we'll see anything like the last 5 years will be around late 2030s early 40s. Until then let the good times roll. (y)
 

Hoggums

Senior member
2,176 878
All this money people are borrowing to buy these increased house prices has to be paid back. Where is it going to come from? They can service the debt now while interest rates are at 0,5%. But what if the interest rate rises 8x to 4%? The only answer is to increase their wages to cope, but that means there's more money about - people will buy more stuff - prices will go up in response - and before you know it we have even more inflation and even higher interest rates.

The help to buy scheme is no such thing. The government is simply allowing people to buy houses they can't afford.

All this talk of a housing shortage meaning prices will continue to rise is nonsense. If people can't afford a house - then there's no demand at higher prices and therefore the prices cannot rise beyond a certain point in relation to wages. It's simply low interest rates and reckless lending that's still going on that is propping up the market. in order for house prices to increase, wages go up - and as I've explained - then so does inflation and interest rates.
 
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new_trader

Legendary member
6,665 1,489
All this money people are borrowing to buy these increased house prices has to be paid back. Where is it going to come from? They can service the debt now while interest rates are at 0,5%. But what if the interest rate rises 8x to 4%? The only answer is to increase their wages to cope, but that means there's more money about - people will buy more stuff - prices will go up in response - and before you know it we have even more inflation and even higher interest rates.

The help to buy scheme is no such thing. The government is simply allowing people to buy houses they can't afford.

All this talk of a housing shortage meaning prices will continue to rise is nonsense. If people can't afford a house - then there's no demand at higher prices and therefore the prices cannot rise beyond a certain point in relation to wages. It's simply low interest rates and reckless lending that's still going on that is propping up the market. in order for house prices to increase, wages go up - and as I've explained - then so does inflation and interest rates.

One group will always benefit at the expense of another, but this is obscured by economic reporting. High house prices provide zero economic benefit to an economy.
 

new_trader

Legendary member
6,665 1,489
House prices to rise £33,000: Property boom shows no sign of slowing | UK | News | Daily Express

interesting article!
@A 13 per cent rise would add nearly £33,000 to the asking price for a typical [email protected]"
so when panic sets in, people will be fighting to buy the houses

That's hilarious...as if the average Brit is sitting on mountains of cash just waiting for the right time to buy :rolleyes:

I don't know what planet Nationwide is on, but I've been keeping a close eye on property prices in my area for the last 4 years and prices have been stagnant. People in the U.K are broke, just like the Government.
 

Atilla

Legendary member
19,821 3,091
All this money people are borrowing to buy these increased house prices has to be paid back. Where is it going to come from? They can service the debt now while interest rates are at 0,5%. But what if the interest rate rises 8x to 4%? The only answer is to increase their wages to cope, but that means there's more money about - people will buy more stuff - prices will go up in response - and before you know it we have even more inflation and even higher interest rates.

The help to buy scheme is no such thing. The government is simply allowing people to buy houses they can't afford.

All this talk of a housing shortage meaning prices will continue to rise is nonsense. If people can't afford a house - then there's no demand at higher prices and therefore the prices cannot rise beyond a certain point in relation to wages. It's simply low interest rates and reckless lending that's still going on that is propping up the market. in order for house prices to increase, wages go up - and as I've explained - then so does inflation and interest rates.


Not disputing the economics Hoggums and what NT says is also true.

However, G guaranteeing mortgages is to facilitate extremely risk averse banks to start lending again. Like guaranteeing export payments.

House prices increases are no benefit agreed but the frequency of exchange coupled with the multiplier of other transactions a house purchase generates is good for the economy. The exchanges need not be at higher prices but confidence brings about increased purchases and thus economic activity.

Finally, I'm only a player in the market. Personally, I'm more into eco-builds and going off-grid hugging trees to be honest. I do think house prices are way over priced. Not sure why people feel the need to buy such big, ostentatious houses and then choose to spend 10 hours at work paying for them. But that's life as we know it for quite a few people... :)
 

forex999

Active member
161 8
> London prime properties are up nearly 60% in past 10 years, and that is an amazing growth as rich overseas buyers are snapping em.
> Construction activity is 40% below average, so no new homes are being built
> BTL investors are snapping up anything that comes to market, as with increasing rent yields and low interest rates, with so many tenants on the F***** housing benefit, this will be a good growth industry
> Election - They need to win again, so they will create a "feel good factor", unfortunately electorate have "tiny" memories, so the buggers will do anything to prop up the market

So to conclude, after the win the election, they will raise interest rates, but by then the economy will have started to motor up.

So with this data, a housing crash is unlikely!
 

Atilla

Legendary member
19,821 3,091
Party looks like it's set to continue on easy money...

The post BoE-Carney FG/MPC statement 'stewards enquiry' is ongoing. Both UK asset classes continue to swing about wildly as players decipher whether the sell-off(s) were a bit rash on known facts/rhetoric. Certainly, rebounds suggest this may have been the case but the angst at the time was warranted on (so many) caveats, KO's and provisos = uncertainty. Still, [GILTS] clawed back more than 1/3pt at one stage but currently trade 110.90-00 (-2/5pt) in still jumpy markets & remain underperforming [BUNDS]. The EZ benchmark is more or less flat, last at 142.10 hence the 10Y yield gap is out to 82bp (almost a 3yr wide). The battered [SHT STERLING] strip struggles to rebound by the same degree and is 1-10 ticks offside in 2014-15 contracts vs +13 ticks on the initial policy headlines - ie tied to 7% u/rate and not seen falling below until 2016.


Perfect timing - superb speech well delivered imo. (y)
 

forex999

Active member
161 8
> London prime properties are up nearly 60% in past 10 years, and that is an amazing growth as rich overseas buyers are snapping em.
> Construction activity is 40% below average, so no new homes are being built
> BTL investors are snapping up anything that comes to market, as with increasing rent yields and low interest rates, with so many tenants on the F***** housing benefit, this will be a good growth industry
> Election - They need to win again, so they will create a "feel good factor", unfortunately electorate have "tiny" memories, so the buggers will do anything to prop up the market

So to conclude, after the win the election, they will raise interest rates, but by then the economy will have started to motor up.

So with this data, a housing crash is unlikely!

> Looks like Carney was reading T2W forum! lol,

Bank of England governor Mark Carney has said the Bank will not consider raising interest rates until the jobless rate has fallen to 7% or below.
 

forex999

Active member
161 8
Party looks like it's set to continue on easy money...

The post BoE-Carney FG/MPC statement 'stewards enquiry' is ongoing. Both UK asset classes continue to swing about wildly as players decipher whether the sell-off(s) were a bit rash :

I often fail to understand these WILD swings!
who is causing it?
surely not traders, cos I am sure they are not putting big buy or sell orders

OR

Is it market makers, to shake off weak players?
anybody has any ideas?
 

bhavin987

Junior member
13 1
"Homeless charity Shelter said house prices were so high that on average it takes a couple with a child up to twelve years to save for a deposit. Parents across the country are contributing £2 billion a year to their children's house-buying fund."

If there is NO FTB then there is NO housing market! simple!

A crash will happen, even if it is after the elections!
you cannot f*** up with the markets, and soros proved it.
Eventually there will be a catch up, and the market forces will win.
 

Atilla

Legendary member
19,821 3,091
"Homeless charity Shelter said house prices were so high that on average it takes a couple with a child up to twelve years to save for a deposit. Parents across the country are contributing £2 billion a year to their children's house-buying fund."

If there is NO FTB then there is NO housing market! simple!

A crash will happen, even if it is after the elections!
you cannot f*** up with the markets, and soros proved it.
Eventually there will be a catch up, and the market forces will win.

I thought we had the crash in the last five years. Biggest ever!

You waiting for an even bigger one? :-0

Some people were predicting even a 50% house price crash. As it happens it has been a bit of a damp squib really. I'm sure some people will bark on about fiat currencies and their demise at the printing presses but bricks and mortar and land is cool in my portfolio.

Catch the wave and ride it. Hands up in the air and wave them as if you don't care :clap::clap::clap:

Next BIG crash due late 2030s. :whistling
 

bhavin987

Junior member
13 1
I thought we had the crash in the last five years. Biggest ever!
You waiting for an even bigger one? :-0
Next BIG crash due late 2030s. :whistling

Yes I am expecting a mega crash, what happened in the last 5 years was just a minor tremor! but it will be 18 months after the elections. For now I am invested in properties. Bought few run down flats last year, already showing near 20% gain.
will start to liquidate as from 2015 onwards
 

Trader333

Moderator
8,655 981
How can there be any crash when the demand is outstripping supply and by a large amount ? Most of London is being bought up by foreign cash and this has the effect of moving the prices rises up out of London as well. It is easily possible now to commute to London in under 90 minutes and live over 150 miles away and people are doing it.

I agree that FTB cannot get on the ladder but that doesn't mean that those with equity in their property will suddenly decide to lower prices. In my view the only thing that will possibly cause a crash is an increase in interest rates. That is because so many people are on a knife edge with monthly costs and there has been no increase in salaries over the last few years that any increase in mortgage payments will send them over the edge.

It is also interesting to see that a significant number of people taking out payday loans are professionals such as doctors, lawyers, dentists, teachers etc and that in itself shows how fragile finances are for a very large section of the population.

I also doubt the Tories will win the next election as their vote will be split between UKIP and Tory which will kill all their marginal seats. Labour will win easily by default as a result of just that alone in my view unless something quite dramatic changes things.
 

0007

Senior member
2,376 663
It is also interesting to see that a significant number of people taking out payday loans are professionals such as doctors, lawyers, dentists, teachers etc and that in itself shows how fragile finances are for a very large section of the population.

If that's true -- and I have no evidence to contradict it and would be interested to know the basis for this argument -- then it is very significant.
 
 
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