I'm happy to apologise, I wasn't trying to be disrespectiveful toward those who bust-ass to own their own home rather than (for example) sponge off the state.

However, I feel my point stands - those who have really overstretched and susceptible to changes in market value are far more likely to be living at the lower end of the property market rather than 5-bed detatched mansion. Those at the upper end tend to have contingencies, or are less likely to need to move home.

Thank you for explaining why you are bitter, but I'm leaning towards you being jealous rather than bitter, and actually edging towards you hoping there is a massive crash so you can stick your fingers up at the young, up-and-coming who've stretched saying "ha ha, told you so". That's a terrible attitude to have.

You are totally 100% correct - there are people who've routinely tapped into their artifical equity because the value of their home has risen significantly in a small period of time. They've bought new cars, had nice holidays, enjoyed every gadget in the home. Well, personally, I'm happy for them - they are benefitting from the solid economy over recent years that we've built. I know I'm more interested in paying my mortgage off and looking longer-term, but there's part of me who wouldn't mind a new Porsche, or to take the Mrs FirstClass to NYC shopping regularly. I don't think we should put people down who've taken a chance on property and are enjoying the benefits, and I sincerely don't think we should mock them if it does go pear-shaped. Enjoying other peoples misfortune is truely saddening.

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Enjoying other peoples misfortune is truely saddening.

yeah shame on you Pflusk.

But I don't entirely agree with either of you, I'm more in the middle, I don't wish people who went flashy things crazy to end up homeless but a bit of a reality check is loooong overdue.

Malkie, if you are as intelligent as I hope (think) you are from your posts, then you will know there is no such thing as a free lunch.

I would also hope that you seriously dont think we have a "Solid Economy".

State debt around 40% GDP (only 3 nations that are worse, Pakistan, zimbabwe and Egypt).

Individual Debt over 100% GDP (worse than US).

UK Individual unsecured lending equal to the sum of the rest of Europe's.

Numerous warnings from the IMF regarding the poor state of the UKs finances.

Enormous trade deficit.

Tumbling pound Vs Euro (more inflation). We dont have much of a manufacturing base any more to produce our way out of any recession.

GDP woefully dependent on finance sector and sercice sectors, both of which will take a massive hit in any upcoming credit crunch led recession.

We have been running a worsening budget deficit for the past 9 years (do you know that if you remove all the debt added to the UK economy, we have been in recession since 2001?) This hasnt been "good" debt, ie investment in increased productivity and public services, its been in the most part, the bad kind, IE people spending debt on consumption, which is woefully unsustainable.

This is not opinion, its FACT, published by recognised international bodies.

Hardly the ideal picture of a "solid robust economy", yet typical of a uneducated Labour/Socialist agenda.

As for jealousy, sorry, but no. I have always tried to counter the argument that "rent is dead money" (How is that the case when I pay far less in rent than I would on the interest portion of a typical first mortgage?) I have saved and when I buy a house, hope I can look back and be glad of the sacrifices I made to earn the right to own my own home, not just walk into a bank, pick up a 100% mortgage and expect its price to go continually upward. I have also tried to counter the "Property is a safe investment" argument, which historically IMO held true. Not at the moment I am afraid. I would never enjoy someone elses misery over this, but then again, no-one held a gun to their head and made thm sign a promise to the bank which they later found they couldnt keep. Thats the real world I am afraid.

As for the MEW'ers, Schadenfreude rules here. You dont get anything for free in this world, and unfortunately a lot of people are going to find that out in pretty short order. They didnt lay down a chance. Until recently, IE credit crunch, it was a dead cert to make money. They were printing 14% more a year. That was hardly going to reduce prices was it?

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Those at the upper end tend to have contingencies, or are less likely to need to move home.

I would typically agree wih that argument, unfortunately it did not hold in th last crash, and it wont in this one. Lots of ciy workers losing jobs, many with second homes all over the country. 800,000 forced moves last year (divorce, job moves etc) will force volumes through, unfortunately for the sellers, it wont be at the prce point they were expecting IMO.

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I still think if you didn't stretch yourself in the first place and you have kept on top of your finances and paid your mortgage like you were expected to, the banks are not going to clamp down their doors.

HC, in response, the banks will not have a choice. Many, albeit they are not admitting it, are fighting for survival IMO. emember that thread about a year ago in which I posted comments by Mervyn King stating they should watch their balance sheets (the one that got deleted somehow... ) It recieved a load of comments about how I was mad, banks will never go under etc (queue northern Crock) well, they have a whole host of other debt which is going to go sour if the economy goes topsy turvey. Namely these horrid things called collateralised debt obligations which they are bricking themselves if the debtors now find themselves uhnable to pay. The banks will do anything, and I mean anything to stay afloat, thats why the LIBOR rate is climbing, as the banks are unwilling to lend to each other because they are unsure of whether one of the other great big banks has a load of CDO turd lurking off their balance sheets. Its going to get far worse if businesses start to fail with large outstanding debts to the banks (there are a few HUMONGOUS loans out there that were used to buy companies outright).

I did mention all of this in other threads, but, as I said before, was written off as a nutter. There is no glee in getting proved right, just immense anger that those that were in a position to do things to stop it never bothered. The writing was on the wall. They chose to ignore it.

Pflusk, do you ever feel you're a bit...you know, obsessed with money sometimes?

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The number of Californians defaulting on mortgages has reached such a level that Wachovia, the fifth-largest US bank by market value, says it has been forced to raise up to $8 billion (£4 billion) in emergency funding and raise its provisioning.

Oops, there goes another one..

Cakehead, sometimes yes, but then again I also expect that a government/regulatory bodies that has lauded itself for 10 years for fiscal stability should be shown for the sham it is... People trusted them after all. I can assure you that its in everyones interests to know what is going on at the mo, even if its at the most basic level.

No, I wouldn't argue that we currently have a "solid economy", I'm merely stating that spiral in house prices was largely due to us having a decent ecomony, and that many people took equity out of their home based on that. Your essay on the economy wasn't required, I see my share-prices reguarly

(How is that the case when I pay far less in rent than I would on the interest portion of a typical first mortgage?)

Because your rent will constantly increase whereas a fixed rate it will remain the same. My mortgage is significantly less than renting a similar property, so the longer you rent, the more you lose in the long run. It wasn't when I started, but it is now - by a long way.

not just walk into a bank, pick up a 100% mortgage and expect its price to go continually upward.

This is the root of your bitterness. Many people did that, and you could have too, and you are angry that it was so easy for them, but you've put the graft in to secure a sizable deposit. Perhaps you'll have a greater sense of achievement when you buy a home than the spotty graduate on a 100%, but for every year that slips past without a significant change in house prices you are falling behind.

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Because your rent will constantly increase whereas a fixed rate it will remain the same. My mortgage is significantly less than renting a similar property, so the longer you rent, the more you lose in the long run. It wasn't when I started, but it is now - by a long way.

1). My rent has gone up circa 3% since 2003. Hardly groundbreaking. I have saved all the cash, and more (no council tax, its included in the rate) and am earning interest @6% PA on it.

2)Read the CMLs latest report released today and weep. Worst figures they have EVER recorded for price reductions in the marketplace with only Scotland posting gains. so

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but for every year that slips past without a significant change in house prices you are falling behind.

Doesnt quite seem to be a valid point at the mo does it? I am astounded at your bullishness, are you sure you dont have a vested interest in teh property market? It sounds awfully as if you have been brainwashed by Phil (who now acknowledges we are in a falling market), Kirstie and Anne Ashworth...

I've no reason to lie about my interest in property - I'm honestly not sat here with my fingers in my ears shouting "la la la la", I'm just giving you my take on my situation.

I don't/won't need to move, and I'm living significantly below my current means, so if things really did go pear-shaped my life won't be particularly impacted.

You are determined in your opinion, which is fine, but we've been hearing the same rants for the past 5 or so years - and my point stands that with each passing year my capital reduces, but my payments remain the same, and are far, far below renting prices. You've be in the same situation too after a set number of years of not renting.

Point of interest - where are you getting 6% interest ? Is that before or after tax?

I save most of my cash in ISAs (recent change of allowance is a good thing!), there are a few bonds I also purchase with short-term payback periods, and have one with NR.(around 6-12 months).

6% is the figure I have worked out for the last 12 months. Around 5.5% for next year, taking account of IR cuts.

As for the rest, good old online savers (Sainsburys, wont touch the Icelandic savers with a barge pole), all of which is in my wifes name, which doesnt attract as high a rate of tax (10%).

I made a few investments on the stock market, including one (albeit small) punt on shorting NR, which made a few bob This years MAXI isa investments include Tesco + HSBC (first MAXI), although the vast majority is in savings. HSBC should do alright, with strong backing from asia, although I expect Tesco to dip in the short term. Am planning on piling into FTSE and a small investment on foreign funds (mainly China) once the madness unwinds, and the banks come clean on the scale of their CDO writedowns (May be some time yet...)

Generally, I will only invest once most of the market hysteria is over and investors have capitulated. Lets just say I believe although P/E are pretty low at the mo, the market has a way down yet...

On renting, all the best to you as a homeowner, for you it makes financial sense. Although in a world of low pay inflation, your debt is being eroded pretty slowly I would imagine. In my experience, rents are way, way below mortgage payments and at the mo, are fairly stable (and those that shop around for desperate and inexperienced landlords can oft rent for less than what the LL is paying in interest on their mortgage) in which case, renting is by far the best option as long as you save what you would have spent on the mortgage and invest wisely, instead of blowing your income on useless imported guff. Besides, even if the LL goes bust, I have a wealth of legal protection which is on the renters side!

cheers for the investment info - I'm more or less in the same boat - trying to avoid the 40% tax on the interest as far as possible.........

so tell me, what are you going to do if prices don't ever come down significantly?

I will definately buy, but because of instability in my job (having to move), I am not in a position to commit to a region for a number of years yet. I dont particularly fancy having to pay stamp duty on every move, together with ea fees etc it doesnt make sense for more than just me believing the market is overvalued; I dont particularly want to rent forever, but I have seen great benefits to it since I have rented (to be honest I had some misguided views on it till I tried it, there are a few LLs that will sign a 5 year+ tennancy agreement if being forced to move is the worry, you also get added legal protection).

Probably reckon I will buy though within the next 5 years whatever happens.

quote:

Originally posted by malkie:
Point of interest - where are you getting 6% interest ? Is that before or after tax?

I get 6.4% interest, fixed and no tax! :P

can you elaborate? You can only put minimal funds in an ISA.

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I get 6.4% interest, fixed and no tax! :P

Que? Are you retired? Its not with Icesave is it? I hear you dont get the BBA 35K protection on savings?

I wish they would double the allowance on ISAs!

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Originally posted by malkie:
can you elaborate? You can only put minimal funds in an ISA.

Yes, but you can transfer previous years across, those years build up and the amount increases with compund interest.
I had other savings elsewhere too.

pflush, I wouldnt touch Icesave with a bargepole, and no not retired for another 30+ years.

Obviously it's £3000 per year (now £3600!), but that's still a minimal amount to be putting away each year. Thought you maybe had some secret tax free haven you weren't telling us about.

<quote> In my experience, rents are way, way below mortgage payments and at the mo, are fairly stable <\quote>

When we bought in July 2006, there wasn't much to choose between rents and mortgages, and we went for mortgage since we happened to have the deposit.

Recently rents in our area have shot up to way more than our mortgage payments, so feel happy with the decision we made.

Negative equity sucks, but only if you need to move. We paid a fair price for our property, didn't mortgage ourselves to the hilt and don't plan on moving anywhere soon. I feel that we'll weather this, but I'm with you in feeling for anyone who may have over-committed due to irresponsible lending practices.

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Originally posted by Battersea:

Negative equity sucks, but only if you need to move. We paid a fair price for our property, didn't mortgage ourselves to the hilt and don't plan on moving anywhere soon. I feel that we'll weather this, but I'm with you in feeling for anyone who may have over-committed due to irresponsible lending practices.

Negative equity also sucks if your fixed rate expires, as you go onto the lenders variable rate, which can mean the payments can go up considerably.

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Originally posted by reverand:
Negative equity also sucks if your fixed rate expires, as you go onto the lenders variable rate, which can mean the payments can go up considerably.

(Worked out how to quote now )

Which is what we allowed for when we took on our mortgage. Others may not have done.

1.4 million people coming to the end of their fixed rate deals this year according to the Times on Friday.

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22:04 Hide Post
1.4 million people coming to the end of their fixed rate deals this year according to the Times on Friday.

Posts: 33

Ouch.

Times also reporting today that 600,000 may go bankrupt this year due to unpayabe "unsecured" lending IE credit cards. As you may know "unsecured" has become somewhat of a misnomer, because they will take back anything they can to get back at the debt.

I can forsee a LOT of secondhand cars for sale on ebay soon...

There was an estimation in the news that 45% of adults owe £10,000 or more (not including mortgages)!!! I am stunned! Actually I'm not really, this is Gordons way of trying to make us all slaves to his masters!