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Credit deflation and the reflation cycle to come (part 2)


spunko

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Fully Detached
On 21/02/2021 at 16:45, Hancock said:

I've worked and saved best part of £1/4 million a fucken unreal amount of money for someone who works with their hands. Was about to buy in early 2014, but whilst on a stopover on my way to a 6 week job i quickly checked the internet and saw that cunt Gidiot brought Help to Sell forward to start immediately as opposed to the following April. I knew the next 42 days of work would be taken by HPI. (and they were)

By the time i got back to England prices were already rocketing up, custody battle later that year which took a further year, with the result meaning i had to stay living in Yorkshire for a while longer meant i've kind of been forced to sit on the side lines, as i've no intention of living in Yorkybarland for life.

All that hard work and best part of £250k buys fuck all, when it would have got something acceptable in 2013. Same place will be £350k now.

 

I'm feeling your pain this morning. Similar amount in savings myself, been waiting to buy and busting a gut to save more, always outpaced by HPI. I am now expecting massive inflation, against which house prices may rise nominally but fall in real terms. So sitting here with the wife looking on Rightmove and trying to decide whether to:

  • Try to buy a roof over our heads with our cash savings whilst holding on to our inflation proof assets - this would mean a max purchase price of £150k, which is just about doable if we buy some shithole in the bottom of a bigger shithole in shitsville
  • Buy a place in France for the same money, have plenty of space, land, weather etc. Downside is the travel restrictions and a different language & culture, and a wife who can see the practical reasons for doing it but her heart is not in it
  • Chuck all the cash into a basket of shares and keep renting and hoping for the best.

I feel so utterly disenfranchised with this country, I can't even put it into words. I know so many people here will feel the same, but I feel like I've been responsible, prudent, never taken a penny from the state and always made my own way. I've paid masses of tax over the years. And what have I got for it? Butt fucked, that's what. I read @Harleyin another post saying it felt like being in a room with the walls closing in. Yes, exactly, and there are no doors or windows that I can see.

I know it's also said often on here, but I am not a gambler, and never wanted to be. I just wanted a quiet peaceful life, looking after me and mine and not bothering anyone else. I have honestly never felt so bereft of hope in my life as I have these last few days.

At least there's always Rachel Riley.

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14 minutes ago, Fully Detached said:

I know it's also said often on here, but I am not a gambler, and never wanted to be. I just wanted a quiet peaceful life, looking after me and mine and not bothering anyone else. I have honestly never felt so bereft of hope in my life as I have these last few days.

At least there's always Rachel Riley.

CAn relate to what i've underlined ,i've tried keeping my head down for 2 decades now, but its bordering on the impossible.

But waking up to read the papers claiming Sunak is extending SDLT so landlords and 2nd homeowners can fill their boots a little longer, is a disgrace ... and Labour say sweet FA about it as they're in on it.

I could have almost tolerated a 1 year lock down for a HPC, but not for HPI.

Good luck to you and the Mrs in whatever you decide, would say wait a little longer but that plan never seems to work out.

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Bobthebuilder
13 minutes ago, Fully Detached said:

I'm feeling your pain this morning. Similar amount in savings myself, been waiting to buy and busting a gut to save more, always outpaced by HPI. I am now expecting massive inflation, against which house prices may rise nominally but fall in real terms. So sitting here with the wife looking on Rightmove and trying to decide whether to:

  • Try to buy a roof over our heads with our cash savings whilst holding on to our inflation proof assets - this would mean a max purchase price of £150k, which is just about doable if we buy some shithole in the bottom of a bigger shithole in shitsville
  • Buy a place in France for the same money, have plenty of space, land, weather etc. Downside is the travel restrictions and a different language & culture, and a wife who can see the practical reasons for doing it but her heart is not in it
  • Chuck all the cash into a basket of shares and keep renting and hoping for the best.

I feel so utterly disenfranchised with this country, I can't even put it into words. I know so many people here will feel the same, but I feel like I've been responsible, prudent, never taken a penny from the state and always made my own way. I've paid masses of tax over the years. And what have I got for it? Butt fucked, that's what. I read @Harleyin another post saying it felt like being in a room with the walls closing in. Yes, exactly, and there are no doors or windows that I can see.

I know it's also said often on here, but I am not a gambler, and never wanted to be. I just wanted a quiet peaceful life, looking after me and mine and not bothering anyone else. I have honestly never felt so bereft of hope in my life as I have these last few days.

At least there's always Rachel Riley.

Its late February we are all f*****g depressed Mr Detached ;).

Have you had a look at those 10 / 15-year mortgage fixes like @DurhamBorn son has got? Might be worth borrowing a similar amount to your inflation linked assets to top up your purchase pot.????????

It will be spring soon, time to get growing in the garden.

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Fully Detached
2 minutes ago, Bobthebuilder said:

Its late February we are all f*****g depressed Mr Detached ;).

Have you had a look at those 10 / 15-year mortgage fixes like @DurhamBorn son has got? Might be worth borrowing a similar amount to your inflation linked assets to top up your purchase pot.????????

It will be spring soon, time to get growing in the garden.

Yep, and the never ending lockdown is not helping either.

I did actually look into exactly what you suggest a couple of years ago - effectively an offset mortgage against our other assets. Unsurprisingly the bank were willing to throw the money at me, did the credit check there and then and said the money could be in my account as soon as I needed it.

Problem is after all this time trying to do the sensible thing I really want to buy something debt free. Actually to be more honest, what I really want to do is go to bed at night knowing that what I have is mine and nobody can kick me out of it. But it's that attitude that has got me where I am today - nowhere.

Just for the shits, take a look at this place in France that popped up in my email this morning. This is quite typical of the area I've been looking in:

https://www.rightmove.co.uk/properties/78249513?utm_content=v2-ealertspropertyimage&utm_medium=email&utm_source=emailupdates&utm_campaign=emailupdatesinstant&utm_term=overseas&sc_id=33153773&onetime_FromEmail=true&cid=a293c479-650e-4ee1-8e78-1cc384fb9d54&csg=dd4a85b10d476f605195f86916e6a2c4b3ae6454ae5b6e103fb5911d49a6afbd#/

 

Spring gardening it is, then - that has a tendency to take all the pain away :) 

 

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Fully Detached
10 minutes ago, Hancock said:

I could have almost tolerated a 1 year lock down for a HPC, but not for HPI.

Good luck to you and the Mrs in whatever you decide, would say wait a little longer but that plan never seems to work out.

Yep, it's like a sick joke. And I agree, I would wait a little longer, but as you say, it just doesn't seem to go the way we expect it to. At some point I think we just have to look at the facts and accept that somehow, we got it hopelessly wrong.

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Bobthebuilder
4 minutes ago, Fully Detached said:

Problem is after all this time trying to do the sensible thing I really want to buy something debt free.

I was the same when I bought, hated the idea of debt. Got a five-year fix, over paid the 10% every year, then at the end of the fix I had saved enough to offset the remainder of the mortgage. It was all gone in 8 years, with hindsight I don't even know why I was worried about it.

Housing is a mess, everywhere I look its mad. Even that lovely house in France would have been half that price a decade ago I expect.

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6 minutes ago, Fully Detached said:

Yep, it's like a sick joke. And I agree, I would wait a little longer, but as you say, it just doesn't seem to go the way we expect it to. At some point I think we just have to look at the facts and accept that somehow, we got it hopelessly wrong.

Oh yes HPC got it epically wrong, there were people on there saying prices wont crash and they were barred.

I was hoping SDLT ends next month (being as its policy its not too much to expect)  and to see a drop in prices/sentiment and buy from a desperate seller/auction at a further discount.

Maybe he will only extend for Owner Occupiers, but thats deluding myself. I fucken hate the DT, they dictate govt policy on what is good for their advertising revenue.

At some point i genuinely see a nominal crash in prices, not just inflation linked, especially in the south.

 

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46 minutes ago, Fully Detached said:

 

  • Chuck all the cash into a basket of shares and keep renting and hoping for the best.

 

Move up North, cheap rents. When the Oilers represent true value (cheap as chips at present), sell the shares. Till then Divs support rent, beer, and the odd take me out!

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Fully Detached
2 minutes ago, Hancock said:

Oh yes HPC got it epically wrong, there were people on there saying prices wont crash and they were barred.

I was hoping SDLT ends next month (being as its policy its not too much to expect)  and to see a drop in prices/sentiment and buy from a desperate seller/auction at a further discount.

Maybe he will only extend for Owner Occupiers, but thats deluding myself. I fucken hate the DT, they dictate govt policy on what is good for their advertising revenue.

At some point i genuinely see a nominal crash in prices, not just inflation linked, especially in the south.

 

I think there might be a small nominal drop in prices over the next year or two but I would be amazed if it was more than 10-15% because - dare I say it - the government will do everything within their power to stop it, and will probably succeed.

I would actually be prepared to take a bigger drop if we bought. The main reason being that every month I'm not shelling out 1k in rent, I would be buying shares. The idea of buying a shithole is really an attempt to put a roof over our heads for 5-10 years and enable me to spend the rent on the future.

 

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1 hour ago, Fully Detached said:

I feel so utterly disenfranchised with this country, I can't even put it into words. I know so many people here will feel the same, but I feel like I've been responsible, prudent, never taken a penny from the state and always made my own way. I've paid masses of tax over the years. And what have I got for it? Butt fucked, that's what. I read @Harleyin another post saying it felt like being in a room with the walls closing in. Yes, exactly, and there are no doors or windows that I can see.

I know it's also said often on here, but I am not a gambler, and never wanted to be. I just wanted a quiet peaceful life, looking after me and mine and not bothering anyone else. I have honestly never felt so bereft of hope in my life as I have these last few days.

Same, problem is for me at least i see how much more i can get for my money either outside of the M25 or even outside of the UK, whilst i have lived abroad before the grass is never greener and if i did it again it would be somewhere with decent weather

But when i see people all around the world talking about how high house prices are and they can't afford them in there own countries and debts so high I do think thats why we also see so many young and old jumping into things like crypto and trading things they would normally never touch 

They see the gains only alot of the time and think is this my way out 

Like @DurhamBorn mentions if silver does increase alot it could pay of most people mortgages so we hold and hope 

But for me and others here im scaling back, learning and progressing in my own way and hopefully manage to buy somewhere or something abroad 

The other trouble is being self employed and earning decent money with savings but my income varies month to month mortgages will be a nightmare i've had friends who have had to pretty much commit fraud to get a mortgage even though they earn well as good tradesmen

anyway you got me ranting now o.O

44 minutes ago, Bobthebuilder said:

It will be spring soon, time to get growing in the garden.

This im getting the garden sorted this weekend plan on spending time out there reading books, reports, and paperwork

35 minutes ago, Fully Detached said:

Yep, and the never ending lockdown is not helping either.

I did actually look into exactly what you suggest a couple of years ago - effectively an offset mortgage against our other assets. Unsurprisingly the bank were willing to throw the money at me, did the credit check there and then and said the money could be in my account as soon as I needed it.

Problem is after all this time trying to do the sensible thing I really want to buy something debt free. Actually to be more honest, what I really want to do is go to bed at night knowing that what I have is mine and nobody can kick me out of it. But it's that attitude that has got me where I am today - nowhere.

Just for the shits, take a look at this place in France that popped up in my email this morning. This is quite typical of the area I've been looking in:

https://www.rightmove.co.uk/properties/78249513?utm_content=v2-ealertspropertyimage&utm_medium=email&utm_source=emailupdates&utm_campaign=emailupdatesinstant&utm_term=overseas&sc_id=33153773&onetime_FromEmail=true&cid=a293c479-650e-4ee1-8e78-1cc384fb9d54&csg=dd4a85b10d476f605195f86916e6a2c4b3ae6454ae5b6e103fb5911d49a6afbd#/

 

Spring gardening it is, then - that has a tendency to take all the pain away :) 

 

Worked for a guy that bought place like that in France years ago and some out buildings that he converted spent a month there working and drinking in the local bars whilst i was young and thought its in the middle of no where for the prices he paid it be nice now mortgage free and some land 

 

Young and stupid

 

 

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17 minutes ago, Hancock said:

Oh yes HPC got it epically wrong, there were people on there saying prices wont crash and they were barred.

 

Remember Injin?

He/she used to say get outta Sterling, they will print forever and ever. Interest rates to zero etc etc.

Most of us used to think, huh? Rates at zero, they were ~5% at the time.

Printing money, no way, they would not do that shit surely? Zimbabwee does that shit!

F@ck me, how Injin was right. 

Glad I'm an old c*nt, the young are so so f@cked.

 

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You boys sound like you all need a caravan in skeggy. 100k in a tracker fund would pay the ground rent and bills and finance on the f'er just put of the divs. 

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1 hour ago, Fully Detached said:

I know it's also said often on here, but I am not a gambler, and never wanted to be. I just wanted a quiet peaceful life, looking after me and mine and not bothering anyone else. I have honestly never felt so bereft of hope in my life as I have these last few days.

We know things are bad – worse than bad. They’re crazy. It’s like everything everywhere is going crazy, so we don’t go out anymore. We sit in the house, and slowly the world we are living in is getting smaller, and all we say is: ‘Please, at least leave us alone in our living rooms. Let me have my toaster and my TV and my steel-belted radials and I won’t say anything. Just leave us alone.’

Well, I’m not gonna leave you alone. I want you to get MAD! I don’t want you to protest. I don’t want you to riot – I don’t want you to write to your congressman, because I wouldn’t know what to tell you to write. I don’t know what to do about the depression and the inflation and the Russians and the crime in the street. All I know is that first you’ve got to get mad. (shouting) You’ve got to say: ‘I’m a human being, god-dammit! My life has value!”

How apt that scene is.

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Fully Detached
6 minutes ago, Lightscribe said:

We know things are bad – worse than bad. They’re crazy. It’s like everything everywhere is going crazy, so we don’t go out anymore. We sit in the house, and slowly the world we are living in is getting smaller, and all we say is: ‘Please, at least leave us alone in our living rooms. Let me have my toaster and my TV and my steel-belted radials and I won’t say anything. Just leave us alone.’

Well, I’m not gonna leave you alone. I want you to get MAD! I don’t want you to protest. I don’t want you to riot – I don’t want you to write to your congressman, because I wouldn’t know what to tell you to write. I don’t know what to do about the depression and the inflation and the Russians and the crime in the street. All I know is that first you’ve got to get mad. (shouting) You’ve got to say: ‘I’m a human being, god-dammit! My life has value!”

How apt that scene is.

Totally - but now I am worried that I probably look and sound like that bloke xD

Apologies for derailing the thread everyone, didn't mean to rant but it seems there are lots of others out there in the same state of mind today. I will shut up and read and learn.

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Yadda yadda yadda
50 minutes ago, Fully Detached said:

Yep, and the never ending lockdown is not helping either.

I did actually look into exactly what you suggest a couple of years ago - effectively an offset mortgage against our other assets. Unsurprisingly the bank were willing to throw the money at me, did the credit check there and then and said the money could be in my account as soon as I needed it.

Problem is after all this time trying to do the sensible thing I really want to buy something debt free. Actually to be more honest, what I really want to do is go to bed at night knowing that what I have is mine and nobody can kick me out of it. But it's that attitude that has got me where I am today - nowhere.

Just for the shits, take a look at this place in France that popped up in my email this morning. This is quite typical of the area I've been looking in:

https://www.rightmove.co.uk/properties/78249513?utm_content=v2-ealertspropertyimage&utm_medium=email&utm_source=emailupdates&utm_campaign=emailupdatesinstant&utm_term=overseas&sc_id=33153773&onetime_FromEmail=true&cid=a293c479-650e-4ee1-8e78-1cc384fb9d54&csg=dd4a85b10d476f605195f86916e6a2c4b3ae6454ae5b6e103fb5911d49a6afbd#/

 

Spring gardening it is, then - that has a tendency to take all the pain away :) 

 

Yes, lovely house. Absolutely freezing in winter but lovely house.

I know people not far from there. A little to the east nearer Limoges. There are reasons why it is so cheap. One of them is lack of work.

It works if you want the rural french lifestyle and have the income. I thought about getting somewhere with gites in a good tourist location. I could work remotely and rent the gites in the summer. However, working in France for my employer is a no because of tax and contract implications. I would also hate the winter.

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Yadda yadda yadda
8 minutes ago, Barnsey said:

Every man and his dog (including Mr Hunter) expecting a taper tantrum in the summer, but don't underestimate the mission to look through the inflation spike ahead

 

Interesting thread. Powell also quoted as saying M2 is unimportant and has no relationship to the size of the economy. So he will ignore that. Also that (during the Trump pre-covid economy) employers were recruiting anywhere they could including prisons and were offering training to get employees up to required skill levels.

Clearly looking for high employment and will 'look through' inflation. How I wish we had an economy where employees had the advantage. That will be hard to achieve if the democrats open the migration flood gates.

4 minutes ago, Cattle Prod said:

That's triggered a memory Barnsey. I think inflation hit 5% after the GFC, and I distinctly remember Bernake or Mervyn saying they would 'look through' it. I thought it was a lovely way to say 'ignore'. Like I now 'look through' my boss because I'm sat at home on f'n dosbods :D

It was UK so possibly Mervyn.

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ThoughtCriminal

I know from experience that the quickest route to depression is to compare uk house prices to Europe. 

 

You quickly realise what a fucking joke it is here. 

 

Of course it could aways act as the catalyst to get the fuck out of here..........

 

 

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2 hours ago, Fully Detached said:

I'm feeling your pain this morning. Similar amount in savings myself, been waiting to buy and busting a gut to save more, always outpaced by HPI. I am now expecting massive inflation, against which house prices may rise nominally but fall in real terms. So sitting here with the wife looking on Rightmove and trying to decide whether to:

  • Try to buy a roof over our heads with our cash savings whilst holding on to our inflation proof assets - this would mean a max purchase price of £150k, which is just about doable if we buy some shithole in the bottom of a bigger shithole in shitsville
  • Buy a place in France for the same money, have plenty of space, land, weather etc. Downside is the travel restrictions and a different language & culture, and a wife who can see the practical reasons for doing it but her heart is not in it
  • Chuck all the cash into a basket of shares and keep renting and hoping for the best.

I feel so utterly disenfranchised with this country, I can't even put it into words. I know so many people here will feel the same, but I feel like I've been responsible, prudent, never taken a penny from the state and always made my own way. I've paid masses of tax over the years. And what have I got for it? Butt fucked, that's what. I read @Harleyin another post saying it felt like being in a room with the walls closing in. Yes, exactly, and there are no doors or windows that I can see.

I know it's also said often on here, but I am not a gambler, and never wanted to be. I just wanted a quiet peaceful life, looking after me and mine and not bothering anyone else. I have honestly never felt so bereft of hope in my life as I have these last few days.

At least there's always Rachel Riley.

I would try to wait out the next year as I'm pretty sure were heading for a property crash with all the latent unemployment i.e. half or more of everyone currently on ferlow (I cant remember how to spell the stupid fucking word OK ?). Worth giving it one more year IMO. I wish I had been able to but I was kind of corralled into buying for various reasons.

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20 minutes ago, ThoughtCriminal said:

I know from experience that the quickest route to depression is to compare uk house prices to Europe. 

 

You quickly realise what a fucking joke it is here. 

 

Of course it could aways act as the catalyst to get the fuck out of here..........

 

 

I'm hoping the bust gives us all a (potentially 'once in a lifetime') chance to buy a house at reduced prices while chaos and fear are stalking the land.

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ThoughtCriminal
2 minutes ago, Loki said:

I'm hoping the bust gives us all a (potentially 'once in a lifetime') chance to buy a house at reduced prices while chaos and fear are stalking the land.

I hear you, I just no longer have any faith that it will happen. 

 

High house prices are like an affliction of the soul on this island. 

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My daughter and her boyfriend are living very cheaply at the moment, in my FILs house. He is in a care home. They are basically covering council tax and the bills, shared between 4 people. It's a bit shabby, but they are saving hard. We are in the south east, and they astounded and dismayed by the price of housing round here.  I think they will move up north eventually to get some value. 

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9 minutes ago, ThoughtCriminal said:

I hear you, I just no longer have any faith that it will happen. 

 

High house prices are like an affliction of the soul on this island. 

My hope (And it is only that) is that for that brief window they will be so clusterfucked there aren't the resources to throw at HPI.

Like March with stocks, I expect them to carry on upwards afterwards.

I am solidly planning for this, and if it does not transpire I will throw in the towel and look into leaving the country.  I do not want to fall for the 'grass is greener' so I need to be realistic though.

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35 minutes ago, ThoughtCriminal said:

I hear you, I just no longer have any faith that it will happen. 

 

High house prices are like an affliction of the soul on this island. 

I'm not saying a crash isn't possible, but the 20% fall in the GFC is very recent history for those able to do their best to avoid the mistakes made, prices were running way above their long term trend and lending was incredibly reckless, both factors really are different this time. Another reason to keep prices up, elderly care equity release.

Budget next week, stamp duty extended until June at the earliest, furlough possibly well beyond summer. Why wouldn't they?

As for being butt****** by being sensible and not taking on debt, if you believe the premise of this thread that we are reaching a secular bottom in inflation expectations, now is the time to use fixed debt to your advantage in a considered way. I'm going to need a new sofa, could buy one with cash, or spread it over 4 years at 0% and stick the money into dividend reflation stocks.

Just fixed our gas and leccy with Shell Energy, longest fix on the market until Feb 2024 with £150 cashback through topcashback. Just another example of how I'm taking small steps to protect against inflation.

MOAAAAAR!!!

 

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3 hours ago, nirvana said:

SELL THE RIPS!

AND it crashed :Jumping:

I'm gonna retire from this thread......I'm a short termist loony and I don't belong here so I'll bid y'all farewell!

I live in a sunny place (obviously not the UK :P) and I'm happy as a pig in shit so I don't need any 'long term divi payers'...

Good luck to you all! I'm happy to talk shite in other threads but I won't post my daytrading, tits and bums drivel in here anymore :)

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