Discussion on economic situation in the UK | Forex Factory

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Discussion on economic situation in the UK

  • #1
  • First Post: Jan 12, 2014 1:37pm Jan 12, 2014 1:37pm
Hello

On the beginning - I am not connected in any way with Money Week, and it is just a serious discussion about economic situation in UK.
I am not sure if you've seen it: http://tinyurl.com/nvl3w9t - short story: UK is in big trouble - now I know they wrote this article to force people to buy the magazine, but it also opens my eyes on the problem.
I am in the middle of home buying process - my own money is 20% of the house, 80% is mortgage - now the unemployment now is bit over 7% - not much in my opinion. but what if fall of UK is close? what if in few years it can be as bad here as it is in Greece or Spain now? what if interest rates will go drasticly up? (rather impossible as it would be like shooting own knee).

how do you see the UK within nearest 5-10-20 years?
On my way to financial independence - if others can do it - I can do it
  • #2
  • Edited 10:17pm Jan 12, 2014 9:52pm | Edited 10:17pm
Article is very restricted. This applies to the entire world. To it's monetary system that's bound to crash.

Even countries which somehow stayed away from that shit or not that deep in it will still suffer no less as their overall development is low - funny enough, cause they didn't borrow that much [would be more correct to say didn't manage to do that again after being burnt as every country did the 'get in debt' thing]

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Check this.
The single most important factor is having control of your own life.
  • #3
  • Jan 13, 2014 2:01am Jan 13, 2014 2:01am
Moneyweek's been flogging that same horse for over 5 years now. The end of the world is nigh, only we know the answer etc etc. Moneyweek's world is finished once the scared money stops buying their rag mags.

Noone knows for sure what the housing market's going to do (Soros sold a lot of his London holdings which have since risen 30% ish for eg) but make sure you buy it primarily as your home first - somewhere you want to live in, and investment second. Personally I would want to be able to afford at least 5% above base at the very least, and put that money aside for when interest rates rise - a near certainty in the next 2 years.

As for the UK being about to topple, it's doing better than the rest of the Eurozone and the debt, though high, is nothing compared to historical levels in the past century. Massive service cuts to come in the next 2 years but that's what reckless spending leads to, no surprises there. We won't likely see a Greece/Spain event because we have control over the £ unlike the poor feckers in southern Europe. Yes, personal debt levels is an issue, but cowering in a cave a la Moneyweek is no way to live.
  • #4
  • Jan 13, 2014 2:34am Jan 13, 2014 2:34am
I am looking for trouble in UK and subsequent short of GBP.

no manufacturing, ethnic tensions escalating which will collapse housing , rampant corruption, denial.

if I was you would get more deposit, which may be hard as they force you buy with inflation.....

else just buy, join denial crowd and cross fingers
  • #5
  • Jan 13, 2014 4:38am Jan 13, 2014 4:38am
Quoting Eur Usd
I am in the middle of home buying process - my own money is 20% of the house, 80% is mortgage
Do you mean you've put an offer on a house or are you looking?

Just out of interest, is it cheaper to rent or pay a mortgage on an equivalent sized property at the moment?
Nothing worth having is easy.
  • #6
  • Jan 13, 2014 5:10am Jan 13, 2014 5:10am
Quoting Patience
{quote} Do you mean you've put an offer on a house or are you looking? Just out of interest, is it cheaper to rent or pay a mortgage on an equivalent sized property at the moment?
I've put an offer. our mortgage will be 495 per month, plus insurances, asking price for rent for similar property is 650. house is nearly new and still with warranty. after unemployment will drop down below 7% BoE will raise interest rates to about 3% (that's what they say), if it will happen within 2 years it means my mortgage will go up about 150 pounds - and will be equal to asked rent, but after 6 years of paying for somebody elses rent I calculated that I paid about 30k, so I was paying somebody else mortgage, not my own.
On my way to financial independence - if others can do it - I can do it
  • #7
  • Jan 13, 2014 5:52am Jan 13, 2014 5:52am
Quoting Eur Usd
{quote} I've put an offer. our mortgage will be 495 per month, plus insurances, asking price for rent for similar property is 650. house is nearly new and still with warranty. after unemployment will drop down below 7% BoE will raise interest rates to about 3% (that's what they say), if it will happen within 2 years it means my mortgage will go up about 150 pounds - and will be equal to asked rent, but after 6 years of paying for somebody elses rent I calculated that I paid about 30k, so I was paying somebody else mortgage, not my own.
Okay, cool. Are you getting a fixed rate mortgage for a couple of years?

You should also take into account all the extra expenses e.g. mortgage booking fee and/or mortgage arrangement fee, solicitor's fee, valuation fee, stamp duty (if applicable), higher lending charge (if applicable), ground rent (if applicable), service charges (if applicable). These usually amount to a few thousand £££'s and negate what you are saving on rent for quite a few months.

At least the house is nearly new so there shouldn't be any maintenance costs (for a while).

Not that I am trying to put you off or anything but people tend to forget all the extra costs associated with buying a house.

And I agree with Triphop. Moneyweek have been flogging that horse for years. Think we subscribed about 8 years ago and it was the same sort of doom and gloom picture being flogged back then. But we all made it through 2008 ....
Nothing worth having is easy.
  • #8
  • Jan 13, 2014 6:02am Jan 13, 2014 6:02am
Quoting Patience
{quote} Okay, cool. Are you getting a fixed rate mortgage for a couple of years? You should also take into account all the extra expenses e.g. mortgage booking fee and/or mortgage arrangement fee, solicitor's fee, valuation fee, stamp duty (if applicable), higher lending charge (if applicable), ground rent (if applicable), service charges (if applicable). These usually amount to a few thousand £££'s and negate what you are saving on rent for quite a few months. At least the house is nearly new so there shouldn't be any maintenance costs (for a while)....
it is fixed for 2 years, buying costs which means bank fees, advisor fees, stamp duty, solicitor, survey etc will be 3.2k, I did check a lot of things to make sure all is fine. So far I only took a loan once in my life as I don't like spending money I don't have, but in this case I calculated and it looks like buying is better option for me. I just hope the unemployment won't rise to Spanish levels, as then all my savings are gone when bank reposesses me, but that's risk I have to take, If I won't buy but keep renting and won't be able to pay rent landlord will kick me out as well.
I am also thinking about buying some cheap flat to rent - I don't want profits of it as long as rent will cover mortgage I'll be fine. it's a long term plan to diversify investments.
About money week I know they are scaring people, but took free 1 month subscription, if I'll like it I'll keep subscribing
On my way to financial independence - if others can do it - I can do it
  • #9
  • Jan 13, 2014 6:13am Jan 13, 2014 6:13am
You all seem to miss the main idea.

This has nothing to do with end of the world kinda stuff, whatsoever. It's just that current monetary system is damn flawed and needs a change. Nothing so 'doom and gloom' here - that has already happened several times in last hundred years.

I won't explain why and how and don't really care whether you'll keep on disregarding evidence or not. For those who's interested I gave the link...
The single most important factor is having control of your own life.
  • #10
  • Jan 13, 2014 7:23am Jan 13, 2014 7:23am
Quoting Eur Usd
it is fixed for 2 years, buying costs which means bank fees, advisor fees, stamp duty, solicitor, survey etc will be 3.2k, I did check a lot of things to make sure all is fine. So far I only took a loan once in my life as I don't like spending money I don't have, but in this case I calculated and it looks like buying is better option for me.
Are you getting interest only or capital repayment mortgage? You have obviously been able to save whilst you are paying rent so you should be able to continue to save whilst you are paying your mortgage so when the fixed rate is up you could whack the savings down as a lump sum payment when it comes to negotiating rates again.

Or you could buy a rental property with the savings. Don't know what your risk level is but you need to account for the property not being occupied, service charges (if applicable), ground rent (if applicable), management fees (if you go that route), insurance and maintenance costs. Getting dossers out of your property can be a long, drawn out affair here. Sometimes other means can be employed like taking a few tiles off the roof. Dossers don't like to live in houses that are leaking .... hahahaha. Saves going through the Court system. Anyway, what I was trying to say is that you don't want to lose sleep over the property.

But, as another poster said above, buy a house that you are happy to live in for the foreseeable future (5-10 years). If you get capital appreciation at the same time, then happy days.
Nothing worth having is easy.
  • #11
  • Jan 13, 2014 7:29am Jan 13, 2014 7:29am
Quoting Mikkk01
You all seem to miss the main idea. This has nothing to do with end of the world kinda stuff, whatsoever. It's just that current monetary system is damn flawed and needs a change. Nothing so 'doom and gloom' here - that has already happened several times in last hundred years. I won't explain why and how and don't really care whether you'll keep on disregarding evidence or not. For those who's interested I gave the link...
Well Mikk, I think most of us that trade the forex market are aware that something is going to happen at some stage but as long as you can say to yourself "I lived my life to the fullest" then we'll just have to take the good with the bad.
Nothing worth having is easy.
  • #12
  • Jan 13, 2014 7:43am Jan 13, 2014 7:43am
Quoting Patience
{quote} Are you getting interest only or capital repayment mortgage? You have obviously been able to save whilst you are paying rent so you should be able to continue to save whilst you are paying your mortgage so when the fixed rate is up you could whack the savings down as a lump sum payment when it comes to negotiating rates again. Or you could buy a rental property with the savings. Don't know what your risk level is but you need to account for the property not being occupied, service charges (if applicable), ground rent (if applicable), management...
taking house to live on interest only is like shooting your own knee ;-) of course it will be repayment ;-)
and hopefully it will be house for life so I am not much bothered about swings of prices etc - I just hope I will be able to pay it off.
I also look at it in different way. considering inflation in 30 years 1 pound will be worth maybe half of what it is now, maybe third. rents will go up much, but I will be still paying mortgage from what I borrow now, so I guess in 20 years time my mortgage rate will be much lower than rent.
On my way to financial independence - if others can do it - I can do it
  • #13
  • Jan 13, 2014 7:44am Jan 13, 2014 7:44am
Quoting Patience
{quote} Well Mikk, I think most of us that trade the forex market are aware that something is going to happen at some stage but as long as you can say to yourself "I lived my life to the fullest" then we'll just have to take the good with the bad.
I think all the people who have internet connection or at least watch TV assume something. Although, this has nothing to do with really getting to know the situation. And if you wanna keep on with 'fullest' you gotta have pretty accurate perception of what's going on and take most possible advantage of it...
The single most important factor is having control of your own life.
  • #14
  • Jan 13, 2014 7:57am Jan 13, 2014 7:57am
Quoting Eur Usd
taking house to live on interest only is like shooting your own knee ;-) of course it will be repayment ;-)
Not necessarily. When interest rates are low you can take advantage of a floating rate that enables you to make lump sum payments on the mortgage which in turn immediately reduces the interest you will be paying. That's if you are expecting to earn much more than you are paying for your mortgage of course.
Nothing worth having is easy.
  • #15
  • Jan 13, 2014 8:00am Jan 13, 2014 8:00am
Quoting Mikkk01
I think all the people who have internet connection or at least watch TV assume something.
You'd be surprised. Obviously you have well informed friends

Some people are just concerned about whether they are carrying the latest handbag or wearing the right shoes.
Nothing worth having is easy.
  • #16
  • Jan 13, 2014 8:38am Jan 13, 2014 8:38am
Quoting Patience
{quote} You'd be surprised. Obviously you have well informed friends Some people are just concerned about whether they are carrying the latest handbag or wearing the right shoes.
I'm not at all surprised as not some but most people are like that - not exactly but pretty much...

Most people have day job too, for that matter - so what? lol

I don't expect much from them but most FX traders are really no different. Without studying the topic specifically I doubt anybody here at all will make the right conclusions...
The single most important factor is having control of your own life.
  • #17
  • Jan 13, 2014 10:48am Jan 13, 2014 10:48am
Quoting Mikkk01
Most people have day job too, for that matter - so what? lol
And what does that have to do with the price of fish?

Well I'll raise my glass to you specifically studying the topic.

Yamas!
Nothing worth having is easy.
  • #18
  • Jan 13, 2014 11:15am Jan 13, 2014 11:15am
Quoting Patience
{quote} And what does that have to do with the price of fish? Well I'll raise my glass to you specifically studying the topic. Yamas!
Don't raise glass to me - just check the link, it's all there...
The single most important factor is having control of your own life.
  • #19
  • Jan 13, 2014 3:56pm Jan 13, 2014 3:56pm
Quoting Eur Usd
Hello On the beginning - I am not connected in any way with Money Week, and it is just a serious discussion about economic situation in UK. I am not sure if you've seen it: http://tinyurl.com/nvl3w9t - short story: UK is in big trouble - now I know they wrote this article to force people to buy the magazine, but it also opens my eyes on the problem. I am in the middle of home buying process - my own money is 20% of the house, 80% is mortgage - now the unemployment now is bit over 7% - not much in my opinion. but what if fall of UK is...
I've read that too. That is not scaremongering; that is true. We are spending far more than we make, even though GDP figures are up. We are giving away billions to the EU (£52million a day in 2005, probably more now), we give more in overseas aid as a percentage of GDP than any other developed nation, we have a health service free to the whole world, we have a nation of idle scroungers and we have just opened our doors to a hell of a lot more... the list goes on and on. We are taxed up to the eyeballs to pay for all that waste; take a look at all the stealth tax you pay. Did you know that 28,000 people here pay for 14% of all income tax? Only 28,000! And I bet they mostly work for the banking sector. So what if HSBC moved its HQ to Shanghai from Canary Wharf? Other banks would quit too, taking those 28,000 top earners with them. Or those 28,000 get pissed off with being fleeced and up and leave? Then what? It doesn't take much does it?

Do you know we are borrowing to pay the interest on our debt? If this was UK PLC, it would long be insolvent. I have a number of houses in the UK and I am not investing here any more. I'm looking to consolidate and get my money out of here.
  • #20
  • Jan 14, 2014 3:55am Jan 14, 2014 3:55am
Jen sounds like you hate the place but to each their own. Most of that Moneyweek has used massaged data combined with hysterical commentary, leaps of faith. Eg to use non-inflation adjusted figures in relation to debt is the kind of dirty tricks a timeshare sleaze would use. Seriously they should be ashamed.

As for the end of money, the beautiful irony is that Maloney hopes to sell gold and silver in exchange for a fiat currency he's already deemed worthless. Him and Moneyweek should get together for a love in.

UK's biggest short term threat isn't govt debt nor manufacturing (that's a long term problem); it's levels of personal debt. Don't overstretch and play within your limits and if you've followed Patience comparing rent vs mortgage you're golden. Remember you've got to be confident that cost of mortgage plus devaluation > rental payments for a year to hold off.
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