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Credit deflation and the reflation cycle to come.


DurhamBorn

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55 minutes ago, Admiral Pepe said:

 

Similar to you guys. Planning on buying in a cheaper part of the UK. Will be a modest house on a ten-year fix and try and knock it out in less.

Yep. I'm in north London so prices are currently mental but trending down, so I hope it will be cheeky offer time. Plan is a 10Y fix @2.5% on a 35-year IO mortgage*  It's (much) cheaper than renting and I can't foresee any situation where any house in the UK is worth nominally less in 35 years.

* - if the mortgage market is substantially different in 9 months, it will because of a catastrophic fall in values, which would suit me just fine.

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1 hour ago, Lavalas said:

Although we’ll have all made a packet during the inflation so it’s all good really. 

Well quite.I think a 10 year fix in a year or two in a cheaper part of the country will be a shrewd move.One that allows 10% capital repayments a year.

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US mortgage rates 7 year high.

https://moneymaven.io/mishtalk/economics/mortgage-rates-hit-7-year-high-QVhf4LUiIkCOdS-iSNsO0g/

'The average 30-year mortgage rate topped 5% on Friday to a Fresh 7-Year High.

Mortgage rates had a bad week and an especially bad day following a much stronger-than-expected jobs report.

Mortgage rates were already operating fairly close to long-term highs, but today's move easily took them to new highs. The average lender is now quoting conventional 30yr fixed rates of 5% for relatively ideal scenarios.

Those without a big down payment or without perfect credit/income can expect to see even higher rates. Most lenders ended up recalling the morning's initial rate sheets and reissuing higher rates at least once today.

There's really no silver lining apart from the fact that the higher rates go, and the quicker they get there, the closer we get to the point that the economy slows down as a result. When that happens, rates will begin to fall before just about anything else. Unfortunately, the expected time frame for such things is incredibly wide (not the sort of thing you hope for if you need to buy/refi). And yes... it's also unfortunate that our one source of solace at the moment involves an economic downturn, but if you want low interest rates, that tends to come with the territory.

Many recessions start out as a housing bust. Another one may be in the works.

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1 hour ago, sancho panza said:

US mortgage rates 7 year high.

https://moneymaven.io/mishtalk/economics/mortgage-rates-hit-7-year-high-QVhf4LUiIkCOdS-iSNsO0g/

'The average 30-year mortgage rate topped 5% on Friday to a Fresh 7-Year High.

Mortgage rates had a bad week and an especially bad day following a much stronger-than-expected jobs report.

Mortgage rates were already operating fairly close to long-term highs, but today's move easily took them to new highs. The average lender is now quoting conventional 30yr fixed rates of 5% for relatively ideal scenarios.

Those without a big down payment or without perfect credit/income can expect to see even higher rates. Most lenders ended up recalling the morning's initial rate sheets and reissuing higher rates at least once today.

There's really no silver lining apart from the fact that the higher rates go, and the quicker they get there, the closer we get to the point that the economy slows down as a result. When that happens, rates will begin to fall before just about anything else. Unfortunately, the expected time frame for such things is incredibly wide (not the sort of thing you hope for if you need to buy/refi). And yes... it's also unfortunate that our one source of solace at the moment involves an economic downturn, but if you want low interest rates, that tends to come with the territory.

Many recessions start out as a housing bust. Another one may be in the works.

Its the opposite in the UK

https://www.thisismoney.co.uk/money/mortgageshome/article-6337601/Mortgage-rates-1-Leeds-BS-new-cheapest-mortgage.html

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16 hours ago, Sideysid said:

The networks pay for an allocation of bands of frequency within a spectrum. 5G will be particularly interesting, as the radio waves will be narrow and focused through beam forming. This means a lot more smaller femtocells will need to be installed in places like shopping areas, businesses and even on homes, as the penetration of the waves will be minimal. These will link back to the IMS that allows for no call drops (same as 4G LTE). 

First a window tax, then a air frequency tax, won't be long before an air breathing tax...and you wondered why they were focussing some much effort on curbing emissions!

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8 hours ago, Banned said:

Don't fall for the headline figure, they need to make money somehow so its hidden behind the catchy 1%.

its a 5 year deal with 1% for first 2 years, then you go to SVR less a small % with limited ability to pay it off early.  The arrangement fee is near enough £2k!

Not so much a good deal if you look at the small print.

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3 hours ago, Majorpain said:

Don't fall for the headline figure, they need to make money somehow so its hidden behind the catchy 1%.

its a 5 year deal with 1% for first 2 years, then you go to SVR less a small % with limited ability to pay it off early.  The arrangement fee is near enough £2k!

Not so much a good deal if you look at the small print.

5.69% Leeds SVR so the last 3 years will see a rate of 4.69% (says 1% discount) and then of course the £2k up in smoke.The 1.47% no fee is what everyone will take of course.65% LTV as well.Leeds on the ball there.35% downside in house prices covered.Houses down 52% and they would come out even on any defaults.

13 hours ago, sancho panza said:

US mortgage rates 7 year high.

https://moneymaven.io/mishtalk/economics/mortgage-rates-hit-7-year-high-QVhf4LUiIkCOdS-iSNsO0g/

'The average 30-year mortgage rate topped 5% on Friday to a Fresh 7-Year High.

Mortgage rates had a bad week and an especially bad day following a much stronger-than-expected jobs report.

Mortgage rates were already operating fairly close to long-term highs, but today's move easily took them to new highs. The average lender is now quoting conventional 30yr fixed rates of 5% for relatively ideal scenarios.

Those without a big down payment or without perfect credit/income can expect to see even higher rates. Most lenders ended up recalling the morning's initial rate sheets and reissuing higher rates at least once today.

There's really no silver lining apart from the fact that the higher rates go, and the quicker they get there, the closer we get to the point that the economy slows down as a result. When that happens, rates will begin to fall before just about anything else. Unfortunately, the expected time frame for such things is incredibly wide (not the sort of thing you hope for if you need to buy/refi). And yes... it's also unfortunate that our one source of solace at the moment involves an economic downturn, but if you want low interest rates, that tends to come with the territory.

Many recessions start out as a housing bust. Another one may be in the works.

Lumber prices cut in half since earlier in the year as well.Houses,Cars and Lumber have all rolled over in the US.

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11 hours ago, Banned said:

'The society has launched a 0.99 per cent two-year discount mortgage available up to 65 per cent loan-to-value with a £1,999 fee, '

Id be avoiding Leeds BS.

Its the one ofthe msaller BS's that I expect to 'resolved'.

Leeds BS has bee ndoign some horrenoudsly risky lending.

 

 

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Bricks & Mortar
3 hours ago, Bricks & Mortar said:

Have advised a relative to go for 10 year fix, but worried about a shock for them when it finishes in 2018. 

Of course, I meant 2028.

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Bricks & Mortar
13 minutes ago, Barnsey said:

So are most here expecting CPI linked salary increases through the reflation period?

I think the thread creator posted the other day, that he thought salary increases in most industries would lag behind inflation.
I think most here fancy a profit from investment if real life turns out as we imagine the future.

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Yellow_Reduced_Sticker

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1 hour ago, Barnsey said:

So are most here expecting CPI linked salary increases through the reflation period?

That will depend largely on what industry you work in and what skills you have.

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5 minutes ago, AWW said:

That will depend largely on what industry you work in and what skills you have.

I think thats very true.Industrial skills will be rewarded.Office skills forget it.The government welfare and wage bill will fall against RPI as well by a decent chunk.

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Democorruptcy
2 hours ago, Barnsey said:

So are most here expecting CPI linked salary increases through the reflation period?

Living wage just hit £9

https://www.standard.co.uk/news/uk/voluntary-living-wage-to-rise-to-9-across-uk-and-1055-in-london-a3980346.html

Statutory living wage is £7.83 in the regions. 7.83 x 40 hours x 52 weeks x 2 workers x 4.5x household income = £147k (plus deposit and could add in the HTB equity loan).

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58 minutes ago, Democorruptcy said:

Living wage just hit £9

https://www.standard.co.uk/news/uk/voluntary-living-wage-to-rise-to-9-across-uk-and-1055-in-london-a3980346.html

Statutory living wage is £7.83 in the regions. 7.83 x 40 hours x 52 weeks x 2 workers x 4.5x household income = £147k (plus deposit and could add in the HTB equity loan).

thats without kids and the compulsory pcp car on mum and dads drive,and 50 a month for the iphone x.

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1 hour ago, DurhamBorn said:

I think thats very true.Industrial skills will be rewarded.Office skills forget it.The government welfare and wage bill will fall against RPI as well by a decent chunk.

If anyone has teenage kids wondering what to study, whether that's at a traditional university or via online courses, some of which are very highly regarded, any hard subject relating to infrastructure or automation will see them paid very well after a few years in industry. Mechatronics, Machine Learning, Civil Engineering, Systems Engineering.

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Talking Monkey
2 hours ago, DurhamBorn said:

I think thats very true.Industrial skills will be rewarded.Office skills forget it.The government welfare and wage bill will fall against RPI as well by a decent chunk.

DB I'm guessing if you're in say an industrial firm doing an office job rather than on the shop floor that would still be a halfway ok place to be, rather than an office job in some services firm

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3 minutes ago, Talking Monkey said:

DB I'm guessing if you're in say an industrial firm doing an office job rather than on the shop floor that would still be a halfway ok place to be, rather than an office job in some services firm

Watch out for automation, its coming for you!  The safest jobs are ones which computers will find difficult to do (reading drawings etc), 90's software packages requiring lots of typing are completely redundant with modern programs which send data between themselves automatically or are auto .csv input.  The progress over the last couple of years has been very rapid.

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36 minutes ago, Admiral Pepe said:

Any of you chaps have any retail corporate bonds in your portfolio?

Just sold the whole lot (ETFs) today as part of my portfolio de-risking.

Done OK even thought they have come down a bit but can't see any sustainable rise at least on the junk stuff.

Looked at the individual ones today but not interested given the yields to redemption, although the Legal and General undated one was tempting.

Sticking to govt bonds (ETFs and maybe ITs or funds).

 

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Bobthebuilder
Just now, Majorpain said:

Watch out for automation, its coming for you!  The safest jobs are ones which computers will find difficult to do (reading drawings etc), 90's software packages requiring lots of typing are completely redundant with modern programs which send data between themselves automatically or are auto .csv input.  The progress over the last couple of years has been very rapid.

Plumbing, plastering, electrician, mechanical engineering, road building, railways etc, etc.

2 minutes ago, Harley said:

Just sold the whole lot (ETFs) today as part of my portfolio de-risking.

Done OK even thought they have come down a bit but can't see any sustainable rise at least on the junk stuff.

Looked at the individual ones today but not interested given the yields to redemption, although the Legal and General undated one was tempting.

Sticking to govt bonds (ETFs and maybe ITs or funds).

 

Im very close to selling 100% of my mid term holdings.

 

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