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Post by gravitykillz on Aug 10, 2019 13:05:14 GMT
14% interest at today's property prices would destroy the property market and eventually the economy of the UK.
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Post by gravitykillz on Aug 10, 2019 13:08:14 GMT
But on the flip side if interest rates were 14% I am sure rolling would be paying 20%, the 1 year 25%, and 5 year 30%!!!
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aju
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Post by aju on Aug 10, 2019 13:40:34 GMT
I can relate to that as we had a mortgage in 1988 I think was at 7% and in one swift move our mortgage interest rate was doubled to 14/15%. We had just moved into a new house and extended our mortgage by some considerable amount too. To cap all that I been promoted from an engineering role getting decent overtime to a managerial role still doing extra time but only getting was was called "Time off in lieu", I was effectively earning less money at the worst time and still working extra time. Of course we coped and whilst Mrs Aju was still looking after the children and I was working in the city (London) we had to improvise by taking in foreign language students amongst other things. Fortunately I was fast tracked in terms of incremental pay rises quite a bit - I had knowledge that was in great demand at the time - so it all worked out well. The thing is in those days inflation was working for us in the sense that pay rises would be keeping with inflation and so the game was to always punt for the most you could get on ones mortgage as the inflation would soon bring up the wages and meet the payments easier. Sadly in time the company caught on to on to low pay rises and increased bonuses as this was a saving in terms of the pension for them - bonuses were non pensionable items. I wouldn't mind paying 14% interest if I could get a 4 bed house in west london for 80k. That was roughly the cost of property around that time! Yes but are you ignoring the wages available then perhaps. A more reasonable way to look at this might be to compare moving from a 3% rate to a 6% rate or worse from 1% to 2% it's effectively the same doubling the outgoings. I wonder what 3% to 15% would be like!. Many people are living in a situation where they are "just getting by", Mrs May's words not mine, and doubling ones most likely biggest outlay which for most people would be their mortgage costs is quite a bit of a hitch to say the least. There is the other issue of many people living to their current means, which when I had very little if any spare money meant there was no leeway for this kind of catastrophic increase. Mr Portillo alluded to this in his recent documentary when questioning Ken Baker on the fateful "Black Wednesday" when the country crashed out of the ERM in 1992. Whilst we may or may not be on the same page what I can say is that I have considerably more spare now than I ever had when I was working for a living and even when Mrs Aju went back to work we were still only just breaking even. When the children finally went to university there was some spare starting to arrive during the very late 90's and early 2000's but it was suddenly taken up by supporting them through university. Oh and for the record 80k at the 14/15% interest rate would not have got me a 4 bed in Cambridge far from it in fact it barely got us a decent 3 bed - only on the outskirts though - probably because we lived fairly close to the world renowned Addenbrookes hospital etc. (75k at the time but within 4 years that had sky rocketed up to 130k before it dropped way back down and many people were then forced into negative equity).
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Post by bgreenwood2000 on Aug 10, 2019 15:12:03 GMT
Perhaps a better comparison is house price as a multiple of income. I bought my first house within a year of graduating for twice my salary. If paying the mortgage was tough, you just waited for a year or two's pay rises to make it easier. Sold that house 2 years later for 30% more than I'd paid.
General advice at that time was to borrow as much as you possibly could, because inflation would soon take the pressure off. It worked well until I bought at the peak of the market in 1989, and sold at a 10% loss in 1997. We were just able to pay off the mortgage with the equity in the house, but had to use savings to pay the solicitor and estate agent.
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aju
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Post by aju on Aug 10, 2019 16:39:20 GMT
Perhaps a better comparison is house price as a multiple of income. I bought my first house within a year of graduating for twice my salary. If paying the mortgage was tough, you just waited for a year or two's pay rises to make it easier. Sold that house 2 years later for 30% more than I'd paid. General advice at that time was to borrow as much as you possibly could, because inflation would soon take the pressure off. It worked well until I bought at the peak of the market in 1989, and sold at a 10% loss in 1997. We were just able to pay off the mortgage with the equity in the house, but had to use savings to pay the solicitor and estate agent. Yes we were limited by mortgages for 3 times salary max until the system went awry and some people could make up their salary and take out the dreaded Interest only ones as well. We had one eventually backed by an endowment insurance until the mis selling thing came to light and we realised the insurance was never going to cover the mortgage. We made a claim on NW and they were forced to put us in the same position as if it were a repayment and we carried on as a repayment. It was that damned new fangled thing called a credit card as well in the very early eighties that we thought was on our side until we realised we'd had the same balance for the best part of 15 years or more. Eventually the "kings shilling" paid that off and some part of the mortgage when I was made redundant, by myself admittedly, with a deal in 2007. We were very fortunate that we never got caught with the Negative Equity bit, just lucky I guess and able to make our choices accordingly.
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Post by propman on Aug 11, 2019 10:33:25 GMT
For repayment mortgages, the increase are a lot less than the interest rate would suggest. If you only had 10 years left, then inrease from 3% to 15% would mean payments increased by 61%, although 156% if there was 25 years left! The reason is that you need to pay a lot less capital initially as the interest drops each month by the interest on the amount repaid, a much larger amount at higher interest rates, That said, I agree that 14% for more than the shortest period would see a market collapse.Prices are predicated on low interest rates continuing just as entering into 5 year lending at 6% is!
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coogaruk
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Post by coogaruk on Aug 11, 2019 10:51:10 GMT
I've only ever bought and sold one house. Made over 100k profit in 12 years (1992-2004)
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aju
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Post by aju on Aug 11, 2019 10:56:27 GMT
For repayment mortgages, the increase are a lot less than the interest rate would suggest. If you only had 10 years left, then inrease from 3% to 15% would mean payments increased by 61%, although 156% if there was 25 years left! The reason is that you need to pay a lot less capital initially as the interest drops each month by the interest on the amount repaid, a much larger amount at higher interest rates, That said, I agree that 14% for more than the shortest period would see a market collapse.Prices are predicated on low interest rates continuing just as entering into 5 year lending at 6% is! Ok so I was relating to a period in my life where we had just moved into a new house (new to us that is) and had just taken out a new 25y mortgage, it was normal then if you were expecting to live that long or were not that old (at that time I was 34 years old) I can't recall but I think at that time is was a repayment mortgage - later on we would succumb to the wiles of insurance people convincing us to take endowments etc way before everyone knew what these things really were and the regulators forced them to come cleaner. I would say these numbers were nothing like that which my daughter and her husband are working with living and working in London. suffice to say I have tried to advise them as much as is possible with own experiences. With the ERM stuff in 1992 that market was literally collapsing in hours on one single day hence the reason the govt of the time was considering exceptional measures. All that swaid I agree with your numbers and your comments 100% it was just that the time I was alluding to was from actual experience of the effect. Later on with the whole Interest only mortgage backed by an endowment that increasing seemed likely to not pay when we came to close on it and apply for recompense as being mis sold etc etc. It all ended in that affair better than I thought although adding the payments for the new repayments of the loan to the interest we were already paying was slightly more than the payments on the endowment we managed and breathed a sign of relief. Who knows what might have really happened had we kept the original approach in place as it turns out my Kings Shilling might have been totally eaten up by closing mortgage payments, we'll never know.
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aju
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Post by aju on Aug 11, 2019 11:12:34 GMT
I've only ever bought and sold one house. Made over 100k profit in 12 years (1992-2004) Yeah ok, so we downsized in a Cambridge Market to a much lower priced Wiltshire small town market, gained a 4 bed exec house selling a 4 bed half the size house and made over 160k. Clearly not all that is profit as by that point we had paid off our mortgage paying some considerable amount of interest in the process but we were happy with the deal. We are much more rural, still in a town, more hilly and way more interesting Scenery compared the the flatland of cambsw etc. To cap it all after 50 odd years in Cambridge, having lived there all my life, I do not see it anymore as home and now after 4/5 years in Wilts we are the happiest and wealthiest we have ever been. Ok we still have many issues and we have to look after money etc but we are able to live life as we want to and we are damned lucky to have this I feel, many are not so fortunate sadly. We had lucky breaks and the benefit family who passed on good things without being subjected to the dreaded force house sales to pay for care. It would have been nicer if Mrs Aju's parents were able to enjoy better things but they always wanted to stay where they were - I guess university city life was their dream and they stuck by it god bless them both. My parents we less fortunate they had always planned to buy their own property but at the time they were tempted by the then new council houses being built in the mid 50's and never ever made it past being tenants. Again they were very happy with their simple lot, in some more so then than people can ever be now, but if they lived in today's times they would be amazed at the state of the country and the way the council house dream has evolved. Oops I've just stopped to read this and realised I've strayed off context but hopefully it lays a bit of background into my previous comments.
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mikeb
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Post by mikeb on Aug 11, 2019 17:40:46 GMT
Ew.... <expletive deleted>? Totally impossible to set a rate in the 5yr market ...No drop down options seem to work, just offers Rolling Mtk ... Anybody cracked this yet? RS must be weeping too. Hmm, yes: So my saved bookmark/open tab for lending in the 5 year market is "https://members.ratesetter.com/your_lending/lend_money/market_view.aspx?pid=4" Which now redirects to the new mess instead. Thanks for breaking that RS, couldn't leave it alone, could you? I can see the "red pen", to set my own rate, so having picked the amount to lend, and "5 year", then hit the red pen -- I'm back looking at a rate from the Rolling Market. Change it to 5 year. AGAIN. The "+" and "-" don't work. So I over-type the "3.4%" with "5.9%", and hit "Confirm" And end up at "https://members.ratesetter.com/problem.aspx" "Sorry! There was a problem with the page that you asked for. Note that we have recently updated our site and some pages have been moved." Really? Try telling your web developers to stop moving things about then?
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Stonk
Stonking
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Post by Stonk on Aug 11, 2019 20:25:17 GMT
There's always these, to display the full market views:
These pages normally appear in a small pop-up window from the "Market Data" area, and hence have no navigation mechanisms, but could be useful to have open in a separate browser tab. Also they have the cumulative totals, which have been removed from the "Invest" pages.
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mikeb
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Post by mikeb on Aug 18, 2019 16:20:00 GMT
There's always these, to display the full market views:
... right up until the point where RS decide to redirect them to members.ratesetter.com/your_lending/hahaha/redirected/smartar5e.aspx .... Those links provide the market view (which is useful), but no means to lend IN those markets. RS will either fix the website soon, or I'll test the withdraw button. Repeatedly. And RS will go the way of Zopa, FC -- another P2P site I used to use. Is it a rule that all "innovative, groundbreaking, changing-the-landscape" companies turn out to be various shades of incompetent, dishonest and opaque, just like the sector they were claiming to disrupt? Looking at P2P now, I think it must be.
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Stonk
Stonking
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Post by Stonk on Aug 19, 2019 21:14:18 GMT
I wonder how many of us have clicked that (non-)link.
Some webmaster at RS diligently perusing their web logs for 404's will be wondering what the hell is going on ...
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upland
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Post by upland on Aug 20, 2019 5:22:49 GMT
I find that its a continual fight nowadays with RS , the stream of alterations are bewildering and functionality moves or goes. I dont enjoy the experience and think my account is a bit of a mess now. I am frightened of lending money out at silly low rates for quite long times and the website change stream does not help.
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aju
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Post by aju on Aug 20, 2019 15:56:01 GMT
I find that its a continual fight nowadays with RS , the stream of alterations are bewildering and functionality moves or goes. I dont enjoy the experience and think my account is a bit of a mess now. I am frightened of lending money out at silly low rates for quite long times and the website change stream does not help. Just set relend levels to 6% at present that seems to be lending sometime late sunday evening. That's on the 5Y though. If it doesn't lend you can always adjust it on monday. whilst I agree that RS is messing with things quite a bit more than I would call "Iterative updates", their term not mine, I would say that it's still workable. It could be easier but its not that hard either unless its changed again this week of course. I am using Chrome latest revision on a win7 PC though not a toy tablet or phone (Mobile).
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