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Homebuyers returning to the market

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Guest LukeSkywalker

The only things that affect housing:

 

1. Interest rates

2. Job security

 

(2) is falling

(1) can only go up

 

The next move (globally) is inflation ............. leading to eradication of debt but bringing higher interest rates (10% in the UK by end of next year).

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Guest garynhelen
The only things that affect housing:

 

1. Interest rates

2. Job security

 

(2) is falling

(1) can only go up

 

The next move (globally) is inflation ............. leading to eradication of debt but bringing higher interest rates (10% in the UK by end of next year).

 

Great! I feel much better now!:arghh:

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Guest LukeSkywalker
Great! I feel much better now!:arghh:

 

Oh but you should do. It means that the UK currency will rise significantly whilst UK house prices will drop slightly.

 

Consider this ....

 

a. House prices are down 20% in the UK in 2 years.

b. The currency is down 26% in one year (2.60 to 1.93 in 12 months)

 

So..... UK rates at 10% likely mean (if my models are correct) that we should see a return to 2.40-2.80 over the next 12-18 months.

 

So (bear with me) .....

 

a. Fix your mortgage rate

b. Rent your house out (as interest rates rise, rents rise)

c. Let inflation eradicate your mortgage debt

d. Sell the house when rates are better

 

Selling a house now means taking a HUGE hit on the exchange rate. Its close to an all time low. It will recover. Take a strategic 2 year view.

 

Oh and as a disclaimer none of this is to be construed as financial advice. There we go - FSA license intact, huge sigh of relief from investment bank.

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The only things that affect housing:

 

1. Interest rates

2. Job security

 

(2) is falling

(1) can only go up

 

The next move (globally) is inflation ............. leading to eradication of debt but bringing higher interest rates (10% in the UK by end of next year).

 

3. Changes in population

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Guest Toomers
Oh but you should do. It means that the UK currency will rise significantly whilst UK house prices will drop slightly.

 

Consider this ....

 

a. House prices are down 20% in the UK in 2 years.

b. The currency is down 26% in one year (2.60 to 1.93 in 12 months)

 

So..... UK rates at 10% likely mean (if my models are correct) that we should see a return to 2.40-2.80 over the next 12-18 months.

 

So (bear with me) .....

 

a. Fix your mortgage rate

b. Rent your house out (as interest rates rise, rents rise)

c. Let inflation eradicate your mortgage debt

d. Sell the house when rates are better

 

Selling a house now means taking a HUGE hit on the exchange rate. Its close to an all time low. It will recover. Take a strategic 2 year view.

 

Oh and as a disclaimer none of this is to be construed as financial advice. There we go - FSA license intact, huge sigh of relief from investment bank.

 

 

LukeSkywalker -- you have just put the sh**ters up me.... I have been looking at the deals on offer as our fixed rate ends next month, we where going to go varible but now I dont know.... I read this

Interest Rate Predictions | Finance Blog

 

and it seems to contradict what you have said... confused now.. J

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Guest r17ych
Oh but you should do. It means that the UK currency will rise significantly whilst UK house prices will drop slightly.

 

Consider this ....

 

a. House prices are down 20% in the UK in 2 years.

b. The currency is down 26% in one year (2.60 to 1.93 in 12 months)

 

So..... UK rates at 10% likely mean (if my models are correct) that we should see a return to 2.40-2.80 over the next 12-18 months.

 

So (bear with me) .....

 

a. Fix your mortgage rate

b. Rent your house out (as interest rates rise, rents rise)

c. Let inflation eradicate your mortgage debt

d. Sell the house when rates are better

 

Selling a house now means taking a HUGE hit on the exchange rate. Its close to an all time low. It will recover. Take a strategic 2 year view.

 

Oh and as a disclaimer none of this is to be construed as financial advice. There we go - FSA license intact, huge sigh of relief from investment bank.

We are moving to Brisbane in the next couple of months and found your post very interesting. Do you therefore recommend us leaving our money over here until the exchange rate picks up? If so, what is the best way to do this, do we just leave it in our bank over here, or use somebody like Moneycorp? This is just me asking for your opinion, and in no way would you be held responsible for any advice:nah:

 

Raych x

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Guest LukeSkywalker
LukeSkywalker -- you have just put the sh**ters up me.... I have been looking at the deals on offer as our fixed rate ends next month, we where going to go varible but now I dont know.... I read this

Interest Rate Predictions | Finance Blog

 

and it seems to contradict what you have said... confused now.. J

 

It doesnt contradict it in precise terms. It actually talks about the disconnect between bank rates and interest rates. Markets are clever things. The reason (basic) that banks are charging 5%++ for fixed rates now are that we can take deposits in at 2% (cuurrent rates for a 3 year bond) and lend them at 5%++. Simple.

 

The single biggest factors in rates will be (a) inflation and then (b) defend the currency.

 

I'm not saying that these guys are wrong, but check out their chart that shows mean expectations of 2% by Q3/2010. This means a QUADRUPLING of base rates ...... if inflation kicks in even slightly, this will go a lot higher a lot faster. IF other countries raise their base rates, the pound will collapse, and nobody wants that (even this government couldn't stand a complete run on sterling).

 

Its complex. For me in a complex world I prefer to take the uncertainty out by fixing as many of the variables as possible.

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Guest LukeSkywalker
We are moving to Brisbane in the next couple of months and found your post very interesting. Do you therefore recommend us leaving our money over here until the exchange rate picks up? If so, what is the best way to do this, do we just leave it in our bank over here, or use somebody like Moneycorp? This is just me asking for your opinion, and in no way would you be held responsible for any advice:nah:

 

Raych x

 

Apologies for the poor quality of the chart attached. I work mainly within what the markets calls "technicals" so charts mean a lot to me.

 

This chart is a monthly chart of £ v $ since 1990. So thats close to 20 years. The red dotted line shows where we are now.

 

I have a bunch on cash to move to Australia, so what I am doing is ....

 

a. Open accounts with HSBC. This gives you a single internet way of accessing GBP/AUD etc. Probably other banks do it, but HSBC have been good to me for 20 years so I can only talk about them.

 

b. Keep some GBP on instant access - in case you need it quickly.

 

c. I have put the rest of my money in the Investec Hi 5 account. (Again this is a personal decision because I find moving chunks of money around hunting the best interest rates a pain).

 

Then what I am planning to do is transfer %ages at different times. So for example I will move 10% of my cash at 2.10, another 20% at 2.20 etc. That way it is a structured move of funds.

 

I use the Macquarie backed internet site to move money and move it in chunks like this.

 

The only bit of advice I would give you for sure is that you must be structured about things, and you must check rates on a daily/weekly basis. It may seem boring but you get a "feel" (its called market touch) for the products (currencies). I estimate this has made me an extra 20% on my transfers ($200k in base terms) over 12 months. Its worth the effort ........

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Guest Toomers

OK.. so if you where me would you take the fixed or varible? "I will not hold you responcible if I decided to act on anything you say and nothing you say is being taken as finacial advise"

 

Im sure you will understand how confusing this is for a mortal such as me!! thanks.. J

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Guest LukeSkywalker
OK.. so if you where me would you take the fixed or varible? "I will not hold you responcible if I decided to act on anything you say and nothing you say is being taken as finacial advise"

 

Im sure you will understand how confusing this is for a mortal such as me!! thanks.. J

 

Depends on a few things:

 

a. Are you looking to stay in the house (or are you going to Oz)?

b. Value of house (i.e. how much equity do you have in it?)

c. If you are planning to rent it out what is the approx rental value?

 

Lots of other things as well really.

 

But in general .....

 

If you are looking to go to Oz, I would always take the fixed rate (all of your risk is concentrated in one currency then). If you are going to stay in the UK then its a different question - and depends on what rates you are being offered (which depends on equity) etc.

 

Apols if this sounds trite, but with more info you can make better decisions.

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Guest Toomers
Depends on a few things:

 

a. Are you looking to stay in the house (or are you going to Oz)?

b. Value of house (i.e. how much equity do you have in it?)

c. If you are planning to rent it out what is the approx rental value?

 

Lots of other things as well really.

 

But in general .....

 

If you are looking to go to Oz, I would always take the fixed rate (all of your risk is concentrated in one currency then). If you are going to stay in the UK then its a different question - and depends on what rates you are being offered (which depends on equity) etc.

 

Apols if this sounds trite, but with more info you can make better decisions.

 

 

Not trite at all, I appreciate the info..:notworthy:

 

a) planning on going to Oz but will be 4+ years yet..

b) very little maybe £20,000

c) rental v mortgage on our current deal we would be about -£100 per month if we rented it out.

 

Not on a good mortgage and is currently interest only!! due to an accident i had 2 years ago my credit got runied (long story) currently offering a fixed rate of 6.69%, where as the varibel is 4.48%!!??

 

Thanks J

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Guest LukeSkywalker
Not trite at all, I appreciate the info..:notworthy:

 

a) planning on going to Oz but will be 4+ years yet..

b) very little maybe £20,000

c) rental v mortgage on our current deal we would be about -£100 per month if we rented it out.

 

Not on a good mortgage and is currently interest only!! due to an accident i had 2 years ago my credit got runied (long story) currently offering a fixed rate of 6.69%, where as the varibel is 4.48%!!??

 

Thanks J

 

OK if the difference is only 2.21% - I would definately go fixed for as long as I could. Especially if I had your circumstances.

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Guest garynhelen
Oh but you should do. It means that the UK currency will rise significantly whilst UK house prices will drop slightly.

 

Consider this ....

 

a. House prices are down 20% in the UK in 2 years.

b. The currency is down 26% in one year (2.60 to 1.93 in 12 months)

 

So..... UK rates at 10% likely mean (if my models are correct) that we should see a return to 2.40-2.80 over the next 12-18 months.

 

So (bear with me) .....

 

a. Fix your mortgage rate

b. Rent your house out (as interest rates rise, rents rise)

c. Let inflation eradicate your mortgage debt

d. Sell the house when rates are better

 

Selling a house now means taking a HUGE hit on the exchange rate. Its close to an all time low. It will recover. Take a strategic 2 year view.

 

Oh and as a disclaimer none of this is to be construed as financial advice. There we go - FSA license intact, huge sigh of relief from investment bank.

 

hmmm, some serious food for thought!

We had considered renting house out but still need to raise capital to finance the move and associated settling costs, tried to re mortgage recently, but have been unsuccsessful so far.

We may not get a visa for some time yet anyway, so as much as we want to be in Oz now, might be better financially in a couple of years time?

 

Thanks for your input,

 

Helen

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Guest r17ych
Apologies for the poor quality of the chart attached. I work mainly within what the markets calls "technicals" so charts mean a lot to me.

 

This chart is a monthly chart of £ v $ since 1990. So thats close to 20 years. The red dotted line shows where we are now.

 

I have a bunch on cash to move to Australia, so what I am doing is ....

 

a. Open accounts with HSBC. This gives you a single internet way of accessing GBP/AUD etc. Probably other banks do it, but HSBC have been good to me for 20 years so I can only talk about them.

 

b. Keep some GBP on instant access - in case you need it quickly.

 

c. I have put the rest of my money in the Investec Hi 5 account. (Again this is a personal decision because I find moving chunks of money around hunting the best interest rates a pain).

 

Then what I am planning to do is transfer %ages at different times. So for example I will move 10% of my cash at 2.10, another 20% at 2.20 etc. That way it is a structured move of funds.

 

I use the Macquarie backed internet site to move money and move it in chunks like this.

 

The only bit of advice I would give you for sure is that you must be structured about things, and you must check rates on a daily/weekly basis. It may seem boring but you get a "feel" (its called market touch) for the products (currencies). I estimate this has made me an extra 20% on my transfers ($200k in base terms) over 12 months. Its worth the effort ........

Thank you so much for your advice LukeSkywalker, I have a feeling there will be plenty others along asking for your advice and this thread will run and run. You will have to start charging! :jiggy:

 

Once again thanks!

 

Raych x

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Guest r17ych

I have clicked your chicken and hope all the other people who benefit from your advice do the same!

 

Raych x

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