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olko71 · 1 year ago

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UK inflation and interest rates high - how do other economies compare?

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By Dharshini David

Global trade correspondent, BBC News

Inflation is still higher in the UK than in many other rich nations so interest rates may yet stay higher for longer.

So how is the UK fairing in other parts of our economic wellbeing? Include growth, jobs and taxes and it’s a mixed picture.

Inflation

For all the talk of lower inflation, it still means prices are a painful 7.9% higher in the UK than a year ago. In the EU, that rate is 5.5%, it’s even lower in the US at 3%.

Britain experienced the worst of both sources of price shocks impacting rich countries – last year’s spike in energy and food costs prompted by the war in Ukraine, and a post-pandemic shortage of workers.

Like the EU, the UK buys in a lot of energy – but the effects of the fall back in wholesale gas prices is taking longer to show in our inflation numbers

This is because of the later introduction of energy support and price movements take a while to be reflected in the cap on domestic bills here.

But so-called “core” inflation, a measure which strips out energy and food, remains near its highest rate for 30 years. That suggests there is still strong spending on non-essentials, treats, with some people using savings stashed away during the pandemic, or due to pay rises.

Interest rates

It’s that discretionary spending that the Bank of England targets when it raises the cost of borrowing.

But we’re not alone. The rates on new mortgage deals in many other countries have shot up over the last 18 months.

But the impact differs. In the US and some of Europe, fixed rate mortgage deals tend to typically run for 25 or 30 years. In some, mortgage holders can switch deals with minimal penalty. The French government also effectively caps rates, so a new 30-year mortgage deal may cost 3.5%. In America those mortgage rates have neared 7%.

It’s more meaningful to compare effective rates – the average across existing and new home loans. According to the latest published calculations, in the UK, where the majority are on two or five-year fixed deals, that’s just below 3% (although that will rise as more loans are re-fixed). In France and Germany it’s below 2%

Although inflation here has slowed, the Bank of England is still expected to raise rates at least once more – and they may stay high for longer than in the EU or US .

But there’s a price.

Growth

When it comes to growth, Chancellor Jeremy Hunt opts to highlight that since 2010, the UK has expanded faster than France, Japan and Italy.

But many experts compare where economies were prior to the pandemic. By the spring of his year, Germany and the UK were the only G7 nations still to have smaller economies than at the end of 2019, according to the quarterly official figures.

Analysts suggest factors behind that may include British consumers being more reticent to ramp up spending coming out of the pandemic. Also international trade being slower to recover from that shock than it was in other major countries. Perhaps this is a result of changes in trading arrangements brought about by Brexit – and faltering investment.

In 2023, however, the UK has been more resilient than some expected.

Growth may have flatlined but consumer spending has held up better – those higher wages and pandemic savings again. It was actually the Eurozone which slipped into recession over the early part of this year.

But higher interest rates engineer a slow down, which takes some time to become apparent. There is now concern among some economists that we could see the UK slipping into recession – and others with it.

But we’ve further to go in playing catch up.

Unemployment

Despite the ravages of Covid and higher interest rates, our jobs market hasn’t done too badly. The unemployment rate in the UK, at 4%, is below that in the EU, although above America’s 3.6%

But there’s far more to the picture.

To count as unemployed, people have to be available for work and seeking a job. Those who aren’t count as inactive. The UK is rare in being one of few rich countries in which there are more inactive people than prior to the pandemic, hundreds of thousands more, in particular as the number of long-term sick has soared. The OECD ranks the UK at the bottom for the G7 for the workforce participation rates (the proportion working or seeking a job).

Add in Brexit restrictions, and that equals shortages in some industries. On the flip side, it may boost wage growth – as workers are more able to secure bigger pay rises.

But as those interest rates bite, unemployment too could rise.

Tax

In not just inflation and rates impacting fortunes. Those earning wages or running companies may have noticed higher tax bills.

The proportion of our nation’s income, GDP, paid to the tax man is currently set to reach a post-war record of 37.7% by 2028.

Feeling short changed? Our so-called tax burden was actually lower than the EU average, although above that in the US on the latest comparable numbers. The tax man in France already receives 45 cents for every Euro generated in the economy there.

But most nations will face increased pressures on their public purse, thanks to an ageing population and existing debts.

It’s been a tough few years all round but there are some areas in which the UK might feel particularly short-changed.

More on this story

How the interest rate rise affects you

3 days ago

Why is UK inflation so high?

3 days ago

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sgsmeloans · 2 years ago

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What You Need to Know About Repaying Your Property Loan in Singapore

Looking for a home in Singapore but worried you won't have enough money to make a down payment right now? Maybe what you need is a financing for real estate. However, the Property Loan Singapore landscape can be confusing due to the wide range of loans available, each with its own interest rates and payback periods. This is why we're here—to help you find your way.

Exactly what is a mortgage loan?

Loans specifically designed to finance the acquisition of real estate are known as "property loans." Apartment buildings, single-family homes, office buildings, and retail establishments are all included in this category.

Home mortgages and business mortgages are the two most common property loans in Singapore. Loans for the purchase of a private residence fall within the purview of house loans, whereas loans for the acquisition of commercial assets are the purview of commercial lenders.

Before deciding whether or not to grant you a loan, a lender will typically look at your credit history. This requires checking your proof of income, bank records, and FICO score. The lender's decision on interest rate and other loan terms will depend on their risk assessment of the data provided.

Remember that getting a mortgage on a home is a huge financial commitment, so think it through thoroughly before you do anything. However, it has the potential to be a highly lucrative investment if approached carefully and with the assistance of knowledgeable professionals.

Singapore's varied mortgage offerings for homes

Almost everyone needs a loan to finance a Business Loan Singapore. To complicate matters further, there is a wide variety of property loans from which to choose. Common forms of real estate financing include the following:

Housing and Development Board (HDB) loans are low-interest loans available for buying apartments.

2) Bank Loans Fixed-rate and floating-rate bank loans are the two most common kinds of loans. The interest rate on a fixed-rate loan remains constant during the life of the loan, while the interest rate on a floating-rate loan fluctuates with market conditions.

3 Commercial real estate loans are primarily used by businesses to finance the purchase of commercial properties like office buildings and shopping centers.

Loan refinancing allows you to switch mortgage providers or improve your conditions without having to sell your home.

Each type of loan comes with its own set of benefits and drawbacks, which depend on your own financial situation. Before settling on a solution, it's important to do your homework.

Finding the Best Home Loan for Your Needs

It's crucial to make sure you're getting the best deal possible when shopping for a Commercial Property Loan Singapore, but it can be difficult to narrow down your options. Determine how much you can afford to borrow by first taking stock of your financial situation. It is important to consider both short-term costs and long-term viability.

The next step is to learn about the various loan alternatives in Singapore, which can include fixed-rate, floating-rate, or even hybrid loans. Your needs will determine the relative merits of the various possibilities.

Before deciding on a loan, think about the interest rate, repayment period, and fees and charges that come with each option. Some loans may involve fees that aren't obvious at first but pile up over time.

It is also a good idea to talk to mortgage brokers or bankers that specialize in property financing, as they may provide helpful information on things like current interest rates and market trends.

Before committing fully to a certain loan package, you should take account of potential risks such as fluctuating interest rates owing to economic conditions or job loss affecting your ability to repay the loan.

Conclusion

Finding the best financing solution for your needs might be challenging while navigating the Singapore property loan market. Whether you're wanting to finance an international trade transaction or refinance your house mortgage, there are a variety of financial options available to help you realize your real estate ambitions.

You should evaluate your current and future financial situation before deciding on a loan type. Interest rates, payback periods, and associated fees should all be thought out prior to making a final decision. Examine the rates offered by several lenders to find the best possible deal for your needs.

#Property Loan Singapore

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myoc1 · 2 years ago

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APRA signals action for Strata Fund Investments

Last month, the Australian Prudential Regulatory Authority (APRA) has signalled what could be the most significant turning point in Australia’s favourite asset class, property, with news this week that it has mandated a higher interest rate to be used by lending institutions (or ‘serviceability buffer’) when considering mortgage applications for residential home buyers and investors.

This has come about after an astounding 20+% rise in national house prices over the last year, flying in the face of the pundits who predicted severe economic concerns during the pandemic. Given the release of Australia’s two biggest economic states from lengthy lockdowns, it is also quite timely, as they run straight into the usually bubbly spring real estate season.

Whilst it is easy to imagine issues with some sectors of the economy, others have had little impact on their incomes. This cohort appears to be leveraging their unspent overseas holiday and pricey dinner surplus into either upgrading their own home or adding to the collection of investment properties. As debt increases, so does its ability to jeopardise the stability of the banking system.

The lifting of the serviceability buffer is material on several fronts. It decreases the borrowing power of the borrower by around 5%, meaning a decrease of $36,000 on the average Australian home loan of $730,000. More importantly, it also means that the Reserve Bank of Australia (RBA) has, for the foreseeable future, stepped down from its secondary role in moderating house prices (its primary role being to influence unemployment and inflation) and handed the reigns to APRA.

Macroprudential masterclass

The setting of the serviceability buffer this week falls under the broad church of what is called ‘macroprudential regulation’, where more targeted policies are put in force to stabilise and protect various areas of a financial system as required. Whilst the idea of such regulation has been around since the 1970s, the post GFC period is a particular instance where such measures grew in relevance.

This is not the first time we have seen macroprudential policies at work in Australia in the last decade, with other forms, such as limits on debt-to-income levels and caps on lending for investment properties being used in 2014 and limits on interest-only loans in 2017. Both arguably worked (in the absence of comparison, of course) in stabilising and slowing high levels of lending to this cohort of borrowers.

The interesting part this time around is the focus on the actual lending rate itself (now fixed at 3%) instead of previous attempts, such as capping investment interest-only lending to 10%, like in 2017. This tells us that APRA’s view is twofold, interest rates are likely to either remain at present record low levels or potentially fall further, and now a synthetic constraint needs to be applied to arrest the ballooning household debt issue. It also reveals that the problem is overarching across the whole property sector, not just those pesky investors pushing up prices.

Central bank limitations

It is safe to say that the RBA has had its hands full over the last couple of years. That might be an understatement. The enormity and severity of the pandemic’s effects on Australian incomes (in aggregate) are challenging to plan for, even with the skills and experience possessed by the entity at the core of the Australian financial system.

On the one hand, it is reasonable to affect the dramatic drop in interest rates to lessen the debt serviceability costs on the economy. This helped by diverting these savings into gaps in revenue and income caused by lockdowns and temporary business closures. It appears to have worked well in conjunction with record fiscal (government) stimulus measures to both households and businesses.

The knock-on effect is, of course, that many Australians, mainly white-collar workers and businesses, have seen little impact to their incomes and revenues as they soldiered on from their kitchens, benches and settees. In fact, for many, the broad and immediate stimulus measures have meant a rise in revenues and wage increases, along with higher profitability from cost savings (think downsizing offices) and increased productivity (longer work hours from home without the drag of commuting).

This surplus, unsurprisingly, has to lead to higher asset prices, both powering the dramatic reversal of the sharemarket falls in March 2020 and the ability to lever up savings when considering a house purchase. As house prices have risen, so has borrowing levels, with 20% of new loans in the June quarter borrowing more than six times their pretax income. Clearly, something needed to be done.

This is where the job of the RBA now bifurcates, as its primary mandate of targeting low unemployment and controlling high inflation conflicts with the runaway asset price bubble it has created. New measures need to be put in place, and so we see APRA having to move in.

What lies ahead for strata fund investments

We are not going back, not to historic mortgage rates, not to ‘reasonable’ rates of return on cash and other instruments like term deposits and not to the way it was.

This week’s return to macroprudential policy marks what could be the next chapter in Australian financial management at the highest level. A new paradigm of record low (or even negative) rates to help ensure stability for Australian financial institutions and their margins has been, at least for now, locked in by enforcing controls at the mortgage shop floor rather than the supply line in preparation for a prolonged period of near-zero rates.

So now the question remains, how much longer can Australian savers accept the near-zero returns on long term capital? New strategies will need to be adopted to ensure that the impacts of the pandemic and its lasting effects on local and global investment returns are mitigated for the foreseeable future.

As a lot owner, financial controller or just strata committee member, there has never been a more appropriate time to reflect upon the investment plans for your long term capital works, maintenance, reserve or sinking funds. With the advent of protracted low returns (or even negative returns once inflation has been taken into account) from cash and term deposit investments, it is high time to consider any alternatives.Strata Guardian is here to help. We have recognised this issue for a long time and prepared a series of portfolios directly targeting the needs of the Australian Strata Community. Get in touch, book a callback or send us an email to start the discussion on how we can help you now.

#Strata Fund Investments

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paradiseshark · 4 years ago

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Interest rates down again this week. The average overnight rate on a 30 year conforming mortgage is down over 2% since last Friday to yet another record low.

It’s the 13th new record low we have hit since June. AmeriSave Mortgage is advertising a 30 year fixed mortgage at 3.5% APR with no points. They are giving money away like the United States government.

The median rental price of a single family home in Jupiter this year is $3,300 a month. At 3.5% fixed you could pay the principal and interest on a $835,000 30 year fixed loan.

Imagine that, you could buy a $835,000 home in Jupiter, borrow all the money and your principal and interest payment would be less than the median rent in town.

Crazy indeed, and rates are likely to fall further as the debt situation in America is off the rails.

Remember, if you are buying a home in the Northern Palm Beaches to interview real estate brokers and find your best deal. Paradise Sharks gives most of our clients a substantial credit at closing as our little way of saying thank you for trusting us with your business.

To learn more about saving big money on your next real estate transaction contact us anytime at;

[email protected]

Fins up......

#jupiter real estate

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billehrman · 5 years ago

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What Do You Believe?

The global markets continued to advance last week despite the normal twists and turns about trade which will continue until there is certainty one way or another. After listening to Trump at the New York Economics Club last Tuesday, it only reinforced our belief that he will NOT do anything, including trade policy, that would set back the U.S economy and stock market. This is how he gauges his success and is his ace in the hole to get re-elected. The bottom line is that we expect Phase I of a trade deal with China to be completed, any additional tariffs to be postponed, a steepening yield curve and further advances in stock prices.

Let’s review what transpired last week on the four key topics that we are monitoring: monetary policy, trade, Brexit and Trump:

Monetary Policy: Fed Chairman Powell spoke last week to the Joint Economic Committees of Congress stating that he believes the current Fed policy is appropriate and will not likely be changed in the foreseeable future unless there is a major shift in their economic outlook. While that part of his presentation was expected, we were very surprised to hear him mention that low interest rates are here to stay as long as the economy remains on its current path. Interest rates could move lower if economic growth was lower. We have long argued that low interest rates are not transitory therefore the stock market multiple could easily reach/exceed 19 times earnings especially with bank capital/liquidity ratios so high. Remember that the stock market multiple has averaged over 15 times earnings over the last 25 years with interest rates 3 - 600 basis points higher with bank capital/liquidity ratios much, much lower than now. Even if the Fed does not lower its funds rate, don’t forget that the Fed is effectively easing further by buying $60+ billion of Treasury bills per month. The bottom line is that global monetary policy will remain extremely accommodative; low inflation will keep interest rates lower than you may think; and investors will be forced to move further out on the risk curve which is favorable for stocks.

Trade: While we continue to hear that snags remain on completing Phase I of a U.S/China trade deal, we are not surprised as each side will continue to negotiate down to the wire. On the other hand, we hear from top authorities on both sides that a deal is near which is likely as each side needs to complete it. Trump needs one to get reelected and Xi needs one if he intends on achieving his goal for China 2025. The real truth is that the U.S economy can do quite well without a deal, but the Chinese economy will continue to weaken without one. The bottom line is that we do expect Phase I to be completed before December 15th when the next round of tariffs is to go into effect. On another note, Nancy Pelosi commented Thursday that there was a breakthrough in the House and that the trade deal with Canada/Mexico could be passed imminently. That is important and very goods for stocks!

Brexit: As we mentioned last week, it now appears that Johnson may have the vote on December 12th to win the election and control of Parliament. If so, his Brexit deal with the Eurozone should get passed. If not, he will have another 6 weeks to conclude a new deal. Either way, both sides need a deal as their economies, which are already in bad shape, would only tank further.

Trump: Trump has clearly put his economic policy at the center of his 2020 campaign as the numbers are good for sure. A standing President who has had a strong economy in his first terms almost always wins reelection and he knows it. We really doubt that he would shoot himself in the foot by escalating trade tensions with China and the Eurozone. We do expect Phase I to be completed and Trump to push out any thought of auto tariffs against European manufacturers until after elections next year. In addition, we are already hearing about a huge middle/lower class tax cut paid for by closing tax loopholes benefiting only the wealthy; a new health care policy as well as an infrastructure bill to be introduced next year. Trump will do any and everything to get reelected using his power of the Presidency for sure.

We do expect trade deals and aggressive monetary ease to support stronger global economic growth as we move through 2020. Clearly bond investors agree as global rates continue to move up as we anticipated.

What do you believe?

Before we go on, we would like to comment on Elizabeth Warrens misplaced attacks on self-made, philanthropic billionaires. We despise personal attacks especially those that hit below the belt. We can agree to disagree and debate the strengths/weaknesses in any proposals putting personal attacks aside. We do not accept the excuse that this is how politics works. It is time that this country come together rather than being dominated, at least in the media, by the far right or far left.

Now let’s review the most recent data points by region that support/detract from our view that there is no place like home as the Chinese/Eurozone/Japanese economies continue to weaken.

United States

Virtually all of the economic statistics reported last week support continuing strong consumer demand and fiscal spending which make up over 90% of our economy: retail sales rose a seasonally adjusted 0.3% in October while industrial output weakened 0.8% which was no surprise due the impact of the GM strike; the core CPI rose only 0.2% and is up 1.8% from a year ago; the PPI fell 0.3%; small business optimism rose to 102.4; and finally the U.S October budget gap widened to $134.5 billion from a year ago which is highly stimulative.

We continue to anticipate that the U.S economy will expand by 2% +/- 0.25% for the foreseeable future without any significant increase in inflation. We were pleased that the GM strike ended which will boost manufacturing and Ford just ratified a new deal with the union.

China

China’s economy continued to weaken as industrial output has risen only 4.7% from a year ago; retail sales have grown only 7.2% compared to an expected 7.8% gain; and fixed-asset investment has slowed to only 5.2% so far this year. Notwithstanding we were not surprised to see Alibaba’s “Singles Day” knocking the ball out of the park with sales increasing to over $38.4 billion worldwide. Jack Ma, the company’s founder, was surprisingly disappointed with the results.

The Chinese economy is continuing to decelerate and badly needs a trade deal to even get close to 6% growth which the government considers a necessity to provide enough jobs to give credence to achieving China 2025 which appears less likely by the day as manufactures shift their supply lines at an accelerating rate. For instance, Ralph Lauren has cut its dependence on Chinese suppliers in half since the beginning of the year.

Eurozone

The European economy is already in a technical recession in our opinion. Just imagine what it means if the strongest country in the region, Germany, grew only 0.1% in the third quarter. No way can Germany reach 0.5% growth for the year which is their current forecast. Can the government hold off much longer using its budget surplus to increase fiscal spending? We doubt it. Clearly the region, like all others, are banking on a U.S/China trade deal to boost their growth rates. But what if there is no trade deal?

Japan

Japan’s growth depends on global trade which is suffering as we all know. It certainly did not help their economy that the government went ahead with increasing the consumer retail tax to 10% on October 1st. The government is hopeful that the U.S and China will sign a trade deal and that the Regional Comprehensive Economic Partnership (RCEP) will be signed early next year with more than a dozen countries in Asia Pacific. Without these trade deals, Japan’s economy will stay stuck in the mud.

Investment Conclusions

Global hope springs eternal that the U.S and China reach an initial trade pact ending the continuing escalating in trade tensions around the world. We do expect one and if so, global growth will improve next year. Clearly the markets agree as evidenced by the sharp rise in interest rates globally as well as higher stock prices.

While we continue to emphasize investing in the U.S as we are less vulnerable if no trade deal is forthcoming. We bought some global industrials, capital goods, machinery and industrial commodity companies; added to technology emphasizing semis as you know and raised our financial exposure that will benefit from a steepening yield curve and acceleration in loan demand. We have increased our retailer exposure here expecting a great Christmas season. Naturally we maintain a number of special situations selling well beneath intrinsic value. We own no bonds as we the yield curve to continue to steepen and are flat the dollar although we do expect it to fall.

The weekly Investment Committee webinar will be held on November 18th at 8:30 a, Eastern Standard Time. You can join by typing https://zoom.us/j/9179217852 into your browser.

Remember to review all the facts; pause, reflect and consider mindset shifts; look at your asset mix with risk controls; do independent research and…

Invest Accordingly!

Bill Ehrman

Paix et Prospérité LLC

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yhsgrs-blog · 6 years ago

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Homeownership and the true cost of homeownership

What Everyone Ought to Know About The True Cost of Homeownership?

Many people don’t really understand the details about the true costs of homeownership. Today, we’re going to be talking about the true costs of homeownership and the other factors that comes with buying a home.

Homeownership is a long-term financial commitment. Buying a home requires a down payment, closing costs, and other expenses. The true cost of homeownership is calculated along with other factors included in the home buying process. On this article, we will discuss how $707 is the true cost of homeownership when buying a $315,000 house.

So what is the true cost of homeownership?

There is no universal answer to this question, you simply have to run the numbers.

But if you are after a precise answer, the analysis can be quite complex.

Current interest rates, where they are and where are they headed with the feds

the mortgage financing

and the qualifying for a home mortgage

Above are essential factors of knowing the true cost of homeownership.

$707 = True cost of homeownership

What if I told you and or the audience that a $315,000 house costs approximately now about $707 a month?

For example, we take a $315,000 house and put down 5%. Let’s first start off with 5% down, which is $16,000. That would mean we have a loan amount of $300,000.

We want to emphasize that from a consumer’s perspective if we ask 10 people what it costs to buy a $315,000 house, 80% will tell you $40,000 – $60,000. They needed this unbelievably high credit score.

Principal and interest on that loan amount would be $1,610.

I’m going to use $250 a month for homeowners insurance, $400 a month for real estate taxes and $132 for mortgage insurance, giving us a grand total of $2,392 a month in terms of a monthly payment.

How is $707/month the True Cost of Homeownership for a $315,000 home?

We understand that the principal interest, taxes, and insurance are $2,392 per month, let’s now dive into the numbers.

TAX DEDUCTION

Let’s break down the tax deduction on a monthly basis, $800 of that payment interests.

So that means $9,600 of that annually will add up to $9,600 a year in annual interest real estate taxes.

If it’s $400 a month that would mean $4,800 a year would be the real estate taxes. So we add the two together, which is 14,400, assuming a 30% tax bracket that would mean a true refund.

A true refund of $4,320 a year, meaning $360 a month.

If we have a $2,392 payment, we understand that $360 of that will be coming back to us for owning the home.

Let’s go a little further……….

PRINCIPAL & INTEREST PAYMENT

We understand that of the $1,600 worth of principal and interest is principal meaning $800 of it, that would mean, the principal is money coming out of our personal savings account and going into our home savings account. So that $800 which is $9,600 / year is going into our home savings account, right?

Take that amount of money because it’s our money going into that savings account off of the monthly payment. So that’s another $800 a month. So, so far we have $360 coming off the payment because of tax deduction. $800 because of our principal.

ANNUAL APPRECIATION

And last but not least, using a 2% annual appreciation, which is ultra conservative.

Ultra conservative. So that’s less than the cost of living would be $6,000 a year roughly, which would be equal to $525 per month.

LET’S DO THE MATH!

We start off with principal interest, taxes, and insurance of this payment being $2,392 minus the tax deduction of $360 a month. We minus our principal payment of $800 per month and we minus our appreciation of $525 a month giving us a true cost of homeownership for $707 a month based on these facts.

Isn’t that interesting?

Other people aren’t so much numbers people, but the bottom line is when you’re working with different professionals and things like that and they can really explain it to you and how it works out to basically buying a home at $315,000 and the actual hard costs to you by the time you back out everything is only $707 a month!

Why is everybody out there running to purchase a home?

Lack of education.

Our industry does a poor job of providing this type of data. Some professionals don’t educate the consumer enough as to what the true cost of homeownership is. Now, of course there’s going to be maintained that you have with the home and so on, but when you stop and think about it now we’re using a 2% factor in terms of appreciation. We can all agree that’s a very low number. And here in Florida, depending on the market, even 4% it’s quite low.

When you think about long term homeownership, you always hear the stories about our relatives up in the northeast sold their home and moved down here, owned it for 10-15 plus years. When you look at their acquisition price versus what they sold for and you get it all out, even with maintenance, half the time you’ve owned the home for free and sometimes in a profitable situation.

Don’t feel trapped any more! After knowing the true cost of homeownership, grab this FREE Special Report and learn “How To Stop Paying Rent and Own Your Own Home”

Mortgage Financing

When we think about the overall market and where we’re at right now, a couple of things. We go back to the educational component. And the biggest challenge that I think people have and even agents as well is not understanding how simplistic mortgage financing is.

The vast majority of Buyers put themselves at an overwhelming disadvantage by approaching the process entirely wrong.

Now that you already know the true cost of homeownership, it’s time to obtain the Best Rates & Lowest Closing Costs in South Florida

From 2008 to 2018 where are we today? And the truth of the matter is that it’s never been easier in a sense to get mortgage financing.

Now we have FHA government programs to where there’s no credit score requirement.

Why?

The way it works nowadays is it’s through automated underwriting systems.

So for example, we approve someone with as low as a 550 credit score just two weeks ago.

But virtually no credit score requirement, you can use baselines. 580 credit score is acceptable for conventional financing, 620 is acceptable. So these are not the highest of scores down payment, as little as 3%. And we also nowadays have these government grant programs that are built into the loan products. So you’re not running around from city to city trying to see who’s got the money.

We actually have a product that we actually give you the money through the loan products or you’re putting down zero.

So what debt to income ratio mean?

A lot of people out there don’t really understand that. What’s the backend?

Debt to Income Ratios

We can go over 50% debt to income ratio. That is your income up against your housing expense can be over 50%. So when you think about that, we have co-borrowers that we can bring on. If someone doesn’t qualify, mom and dad can jump on the loan. There are so many different avenues to get them home.

Let’s use a $5,000 a month income. And let’s say that someone’s mortgage payment is going to be $2,500 a month. That would be 50%, right? So their income is $5,000 their mortgage payment would be, $2,500 so the front end debt ratio.

Think about that, that’s almost 50% of their income can be used for the mortgage payments to qualify. It’s a big number.

That is a big number. Aren’t people, don’t people get scared about that number?

It depends on who you’re asking. Look what it does, it builds wealth.

Federal Reserve: So where are we headed?

Interest rates have been creeping up just a little all-time low still, but they’ve been creeping up a little bit.

Interest rates are up about three-quarters of a percent in the past, we’ll call it 9 to 10 months. We are what we would refer to as in an ascending rate environment. Rates are moving up. Rates right now are falling anywhere between the high 4’s to low 5’s depending on the overall profile. And I have to tell you that it’s an interesting adjustment on a day to day basis in terms of communicating that five number.

It’s still a bargain. The federal prime rate right now is at 5%. It’ll probably end up near five and a half percent by year-end is what we would think. But let’s put all of that into perspective.

We should have interest rates. Interest rates should be around seven and a half percent. The truth of the matter is, is that a fourth, seven and a half percent that means the banks are giving you 5% 500% of your CTE, right? That means the fixed income retired borrower is getting more money on there, on their savings, more money circulating.

If the Federal Reserve confident to increase rates, that means we’re doing well as a country, as a whole.

Our economic position is gaining momentum. We’re creating more jobs.

So someone can let’s say, pay 4.875 on an interest rate, which is up to three-quarters of a percent, but they’re 401k is up 25%.

I mean, what are those numbers really look like when you think about it?

Conclusion

Homeownership is really the American dream and really designed to get you there. Now, of course, there’s a lot of different factors at play when it comes to knowing the true cost of homeownership, but on the long term, we can all agree you can never go wrong.

If you are thinking of buying today, don’t wait any longer. If you have a correct plan in place, know the true cost of homeownership and if you understand what your length of ownership is going to be.

A home is not trading stock. It’s not trying to sharpshoot a bottom. That’s not how wealth is created. The purpose of real estate is to own it.

And so if we think about it from that perspective, a home houses our family, it brings us a lot of joy. It brings us a lot of financial benefits. It brings us tax deductions, a whole lot of benefits come along with being a homeowner. We all know that if we put a long term time frame on real estate, we will almost never go wrong.

Each month, we publish a series of articles of interest to homeowners in Palm Beach and Broward County– money-saving tips, household safety checklists, home improvement advice, real estate insider secrets, etc. Whether you currently are in the market for a new home in South Florida, or not, we hope that this information is of value to you. Please feel free to pass these articles on to your family and friends.

At The Stampini Team, we’re happy to answer any questions you have about buying and selling in the Palm Beach-Broward County area.

Call us now or feel free to share our contact information

with someone you know that needs expert help buying or selling their home.

Receive South Florida real estate news and trends straight to your inbox. Stay connected to the community and be the first to know when new homes come on the market. Sign up here!

#buyahome #CostOfHomeownership #downpayment #financing #home buyer tips #homebuyers #homebuying #homeownership #interestrates #mortgage #MortgageFinancing

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searchingwardrobes · 6 years ago

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Desdichado: Chapter Ten

Writing this chapter was a struggle, and I had to face a fact: I can’t write Outlaw Queen! So I reached out to @snowbellewells, and she came to my rescue. The first half of this chapter is hers, and I am so thankful! She captured the style of this fic perfectly. Make sure to give her some love. The “poems” Emma reads in this chapter are actually lyrics to two Loreena McKennitt songs: “Mummer’s Dance” and her version of “Greensleeves.

Summary: Sir Killian is a noble knight known throughout the kingdom for his heroic deeds in the Crusades. However, he is nothing but the ward of Lord Stefan, which means he is forbidden to wed his childhood sweetheart, Lady Aurora. Emma Swan is the ward of Lady Regina, a former noblewoman of ill repute. They are known as merchants and healers, and sometimes rumored to be witches. Sir Phillip is a noble knight of the Templar who discovers an evil plot by his leader, Sir Baelfire. Treachery and intrigue will soon throw all of these characters together in surprising ways. (A CS AU of Ivanhoe)

Rating: T

Words: 4,000 in this chapter, so hopefully tumblr doesn’t eat the cut

You can catch up on Ao3

Tagging: @snowbellewells @mythologicalmango @teamhook @wellhellotragic @kmomof4 @whimsicallyenchantedrose @kday426 @jennjenn615 @bethacaciakay @snidgetsafan @delirious-latenight-laughs

The fire crackled like a warmly wavering beacon in the dark of the night within the forest. Though they were far off the track where her wagon had been accosted earlier that day and the crackling, popping logs and dancing flames gave off a much welcomed warmth in the chill night air, Regina found she could not get comfortable in the bedroll she had been so kindly loaned, no matter how hard she might try. True, she was a bit further off from the circle of camp nearest the blaze, bedded down with the other members of Stefan’s caravan who had been rescued by the band of forest rebels, so she could always claim she had been too chilled for comfortable slumber as her excuse.

It went deeper than that however; there was no sense denying it - at least not to herself. Her heart ached in her chest at how Emma had been taken from her and only worse and worse possibilities preyed on her mind of what the young woman she loved as a daughter might be enduring even now. Lying there, reasonably safe and warm, but unable to do anything to help her ward, was eating away at her. Finally, she sighed and flung off the blanket, getting up with a huff of frustration and moving to the small circle of men still awake around the fire.

The man who had been speaking when she approached looked up, unsurprised and at ease as she stepped from the trees into the circle of light. Regina was mildly annoyed at his calm knowing, as she generally prided herself on having a bit of the grace she had been raised with in the noble home of a lord and lady, and also some measure of stealth and subtlety from the life she had made for herself and Emma - free, but constantly on guard and on the move.

The three or four men still sitting up with him, clearly putting together some sort of battle plan for the day ahead, did look up, startled, when this ‘Hood’ motioned her forward, his tone light and even a bit taunting as he beckoned, “Come milady Regina, join us. No need to lurk in the shadows.”

Affronted, even as she had been caught out doing just that, Regina huffed and stalked forward, dropping down onto the empty log as far from this Robin of Locksley as she could possibly get. Taking the carved, wooden tankard passed her way, Regina quickly tipped it up to hide at least partially her flushed cheeks and snapping, riled eyes for a moment behind its wide base.

Unfortunately, the sharp, bitter flavor that met her taste buds did not mellow on its way down her throat, and she choked, eyes watering and coughing hard, slamming the drink back down on the log beside her. Glaring at the men gathered around the fire, as if assuming they had tried to play a trick on her, Regina spat out, “What is that?”

The near-giant man seated at Robin Hood’s right raised an arm that seemed thick as a tree branch to jab a finger at her, eyes narrowed in equal distaste. “Tis our own Friar Tuck’s best ale,” he responded heatedly. “One not quite so high and mighty could simply be grateful for drink to wet a parched throat and a safe fire to warm herself by.”

“His best?!?” Reigna spluttered indignantly, completely disregarding the aspersions cast on her character; long used to them and knowing in this case they were at least partially true. “If that’s his best, then I hope he is a better friar than he is a brewer.”

Grumbles broke out around the fire as all the men gathered now voiced their discontent and their restless agitation began to show. “How dare you!” the huge man burst out, gaze trained angrily on Regina.

But Robin’s hand raised placatingly stopped the burly man’s tirade before it could truly begin, falling silent in deference to his leader’s stoic command. “Peace, Little John,” he murmured softly, his voice firm and certain though barely raised, a voice well used to being followed absolutely, even if hardly louder than the crackling fire, the shuffling of unsettled feet, the night sounds around them, and her own breath rasping with exertion echoing in her ears.

Despite herself, Regina simply couldn’t keep her tart tongue in check; she was too off-balance, too worried, feeling much too helpless and angry at everything and everyone to think before speaking. It had earned her more than one harsh punishment from her lady mother in her childhood and adolescence, and she realized wryly that once again - despite all the years between and her drastic change in circumstances - she possessed more fire in her speech than was good for her. “Little?” she scoffed, wincing even as the word slipped off her tongue with derision. She might be rightly shaken and perturbed, but that didn’t give her the right to be hurtful. “Most who would attach such a diminutive before their names might show a bit more restraint at evening repast to be sure the term still fit.” She wanted to bit her own tongue in reprisal, but the words had already been spoken, seeming to hang almost visibly in the smoky air.

“Restraint?!?” the behemoth shot back, looking truly incensed now. “You’re one to speak of restraint, when you wage war with every word that falls from your mouth. At finally meeting the sole heir of your family’s estate, I now see why it ended with no new generation to continue - “

“Enough!” Robin’s sharp order was louder this time, cracking through the air like the whistle of an unfurled whip, harsher and more commanding than Regina had yet heard it - even when he and his men had charged into the fray along the road to battle their attackers. His eyes, which had been so warm and inviting mere minutes before, glittered dangerously as they flicked between his second-in-command and herself, brooking no further obstinance. The argument was over. “Shame on you both, fighting like this when we are on the same side. We must be united if we are to survive what faces us on the morrow. You know this,” he directed that last to his second harshly. The other man’s nod was tight with thwarted frustration, but he did not speak again.

Robin’s shoulders dropped slightly. “Go,” he told his troops still gathered around. “Get what rest you may. We will need all the strength we can muster for the battle.”

The men dispersed, melting silently back into the shadows of the trees. The leader of their outlaw band remained seated across from Regina, silent now and looking somewhat deflated, as if having to exert his authority so harshly had drained him. His head bowed the tiniest degree, and as he ran a weary hand back through his sandy hair in worried tension, Regina was flooded with regret at her outburst and her own ungratefulness. She wanted to apologize, but instead only sat silently, uncertain how to fix the mess she had helped to make, hands clasped in her lap and feeling as small and as overwhelmed as she hadn’t since the night before she left her family home long ago - saying goodbye to the place where she had grown up after one last failed plea to her parents for the right to make her own path, and steeling herself to venture into the unknown world alone.

Biting her lower lip, Regina braved another glance up at the man across from her, only to find him studying her curiously - as if she were some sort of puzzle he could solve and then come to understand. His was gaze less stormy, more quiet and contemplative when he finally spoke, “You’re worried about her, aren’t you? Your ward?” he asked finally, his voice low and steady, though sincere in its question, expressing true concern. Regina was surprised too at noticing a cultured polish to its deep tones that had escaped her notice previously and seemed incongruous with a woodland bandit.

“Emma,” Regina clarified with a nod, not really wanting to proceed, knowing that thinking of her companion, the young woman she had rarely been separated from for any length of time, would only intensify the fears for her replaying in her mind. “I realize there is nothing to be done tonight, and that it doesn’t excuse my rudeness to you or your men. My granny used to say my temper and my tongue would be a bane to me all of my days…” She shook her head ruefully at the memory that had once again proven true and paused before adding, “Be that as it may, I feel so helpless at the thought of her being hurt - or worse….” she shuddered, wrapping her arms around herself at the chill which overtook her. “She’s been with me since she was two year old. In my heart, I feel she is in part my daughter. Not going to her this instant torments me so that I want to crawl out of my own skin!” She shook her head, words running out and getting her nowhere before trailing off to sit once again staring into the fire.

Robin said nothing for some minutes, making Regina wonder if he would reply at all. When he finally got to his feet, Regina half expected him to turn and leave her to her woes, not even sure she deserved more than that from him. Still, her heart ached at the prospect of yet another man who could not handle, or did not wish to, all the impropriety, the whirling emotion, and the outspoken, nontraditional challenge she posed.

However, he wholly surprised her. Boots crunched lightly over the fallen leaves on the ground between them as the archer crossed the emptied circle toward her instead. Removing his deep green cloak from his broad shoulders, he draped it over her own shivering ones, tucking it gently under her chin and then retreating a step as if suddenly afraid that had been too much. When he dropped to sit once more, it was beside her instead, and when Regina met his gaze, it was wistful, melancholy, and seemed to have gained the understanding he had previously sought. “My wife, Marian...God rest her sweet soul...she died bringing our son Roland into this world. She was goodness, purity and light...all I needed in this world...and to think that Roland will never know her…” he shook his head, fighting to rein in the emotion that had clearly risen with his words.

Without thinking, Regina reached out a steadying hand and placed it on his knee in comfort.

“Well, to put it bluntly, I often feel that I fail him every day, simply by being all he has. And yet, I would give anything, bear anything, to insure his safety. So, I believe I know something of your fear,” he finished, giving her a grateful look before he lay his larger hand over her own where it still rested on his knee, clasping it with a gentle pressure.

Regina tried to ignore the frisson of heat that rippled up her arm at the simple contact - not only unfitting, but so unfamiliar to her that she hardly knew how to process it.

For his part, Robin looked startled as well when she blinked dazedly and once more met his eyes. He leaned forward, close enough that his warm breath brushed across her nose and cheeks and she saw the determination solidify in the his face when he made her a solemn vow. “We will find my friend, and your Emma. I swear it to you, Regina. On my honor.”

She held his faze for a breathless moment before finally whispering, “I may have only just met you, Robin of Locksley, but I believe you will.”

Her affirmation, her belief in him seemed to transform his face. The flickering light of the fire burning low captured the smile that curved his mouth upward and glanced off the laugh lines crinkling at the corners of his eyes. “Yes,” she whispered again, as if cementing it in her heart for strength. “I believe you will.”

*******************************************************

And so they linked their hands and danced

Round in circles and in rows

And so the journey of the night descends

When all the shades are gone

A garland gay we bring you here

And at your door we stand

It is a sprout well budded out

The work of Our Lord's hand

The Lady Swan’s voice wasn’t the soft, demure kind typical among the nobility. It was commanding and confident. Even while reading, the sound of it arrested Sir Killian. Listening to her read from the slim volume of poetry also gave him permission to study her features: her cheeks that appled when she smiled, the dimple in her chin, the dusting of freckles across the bridge of her nose. Her eyes were hidden beneath her lashes as she bent her head over the book in her lap, but he had noticed them earlier that morning on the pillow next to him. They were a glassy shade of green that he didn’t think he had ever seen before. And her hair? It was braided today, tamed in a more socially acceptable fashion, yet it still glistened like polished bronze.

We’ve been rambling all the night

And some time of this day

Now returning back again

We bring the garland gay.

She finished reading the poem and smiled as she lifted her head to meet his gaze. “Do you wish for me to read another, my liege?”

He shook his head. “No, m’lady. Courtly poetry can only entertain one for so long, even a knight.”

Killian cocked his head and studied her as she chuckled lightly, running her hand along the cover of the book in her lap as she closed it. “Although,” he continued, “I would like to hear more of you, Lady Swan.”

She shrugged as she set the book on the nightstand. “There isn’t much to tell, I’m afraid.” Her smile wavered, and it caused him to frown.

“Being abandoned is no condemnation on your character, but upon those who cast you aside.”

Emma blinked and her lips parted on a half gasp. “But how did you –“

“I know the look in your eyes for it is one I know well. It is one thing to be orphaned. It is quite another to feel you weren’t wanted.”

Emma ducked her head. “I assumed, Sir Killian, that your parents had died.”

“My mother did,” he told her softly, “I was very young, but I still remember her beauty and kindness.”

Emma’s eyes held equal measures of tenderness and sadness. “I have often chafed over not knowing why I was abandoned in the forest. I never considered the pain of having a parent’s love and then losing it.”

Killian searched her eyes intently. “One can never compare pain. It all hurts.”

Emma gave him a tremulous smile. “That is true. And at least we each found a home.”

Killian clenched his jaw and hesitated. Yet the look in the fair lady’s eyes, the clear pain of her abandonment, made him confess the truth that only two other people in the world knew.

“Lord Stefan would have people think I was taken in as family, for the sake of his precious Lady’s memory. Yet truth be told, I was technically his slave.”

If Emma had gasped in shock and disgust, he wouldn’t have blamed her. Yet she didn’t. Her brow furrowed as she searched his face.

“How can that be?”

“He . . . paid for me. Paid my father. My brother and I should have been slaves toiling on the manor, if not for Lady Rose. She loved us as sons.”

“But not Lord Stefan?”

Emma laid her hand upon the bed covers, and Killian wondered if she realized how close her fingers were to his.

“He seemed to care for us, even if he were a bit distant at times. Perhaps we reminded him of the sons Lady Rose never bore him? I know not. He . . . preferred my brother. That I am sure of.”

Emma leaned forward, a crooked smile upon her lips. “And what makes you believe so?”

Killian smiled in return, “Everyone idolized Liam. He was so good and noble and charitable. Though I lost him, he is still my plumb line. Yet it seems so unattainable. He set the bar so high, how could I ever reach it?”

Emma grasped his hand. “How can you say that? Tales of your heroics in the Crusades have preceded you home. You, Sir Killian, have many marks in the hero column. Don’t think so lowly of yourself.”

Killian had the urge to link their fingers, but hesitated, choosing instead to run his thumb over Emma’s knuckles.

“I am flattered m’lady, but it is bad form to speak only of myself. What of your beginnings?”

Emma’s eyes grew distant as she began to speak. “Living with Lady Regina is all I have ever known. I was but a babe when I came to be in her home.”

“But she has always been good to you?”

“Aye, she has. Like I told you before, she educated me, taught me to fight and take care of myself. This is a cruel world for my sex, and Lady Regina always taught me that I can’t rely on a man to rescue me. She tilted her chin up. “The only one who saves me is me.”

Killian grinned. “So I’ve noticed.”

“I know that Regina is . . . unorthodox in her lifestyle. Combine that with my lack of proper lineage, and the hopes for me to marry are slim. Perhaps it seems lonely, but being an unmarried healer is the best future for me.”

“You are a woman of such fire and passion,” Killian said softly, his voice dropping low, “it is a shame for you to choose such a life.”

Emma’s eyes seemed a shade darker as she locked her gaze on his. For a moment, it was as if an invisible thread were drawing them closer. Killian turned his hand palm up and threaded his fingers with hers. Emma looked down at their joined hands, swallowing hard. Before she could pull her hand free or form a coherent sentence to break their sudden connection, the door to their chambers burst open. The sound sent Emma shooting to her feet, her face burning as if she’d been caught at something scandalous.

Her blush quickly turned to a pallor as cold dread washed over her. The man before her was dressed regally, cruel power emanating from his features. When he saw her, that power softened to barely contained rage.

“You’re not Lady Aurora,” he seethed with an icy tone.

Emma swallowed down her fear. She curtsied quickly and forced a demure voice. “No, your highness, I am Emma Swan, a humble healer.”

“Then why,” Prince James hissed as he strode across the room,” are you wearing her noble garments?”

He grasped Emma’s chin in his hands, his fingers digging into her cheeks.

“There is no need to lay a hand upon a lady,” Killian cried out, struggling to rise from his bed.

Prince James released Emma roughly, causing her to stumble into the chest of drawers behind her. Killian lurched forward, throwing himself between Emma and the Prince. The royal laughed cruelly as Killian stumbled and fell at the Prince’s feet. Emma sank to her knees next to Killian and helped him to a seated position.

“Lady Aurora does not wish to be your bride,” Emma yelled, not caring in the least about her lowly station, “so I helped her escape. She is far from your clutches by now, praise the Lord above.”

Prince James’s rage was clearly evident on his face. Killian held his breath, praying fervently as he never had before. The Prince’s hand went to the hilt of his sword, and Killian knew nothing was stopping him from running them both through. Killian had never wanted his own sword so desperately.

Prince James’s eyes narrowed, dark with loathing, but then he loosened his grip on his sword. His expression turned to one of scoffing.

“I will dispose of you, Sir Killian . . . eventually. But for now, you are my bait. Common peasants you both may be, but your sentimental households will still no doubt come to your rescue.”

He sneered before kicking Killian in the side. Killian cried out in pain, which only motivated Prince James to kick him again.

“Stop! Stop!” Emma sobbed, flinging herself across Killian’s torso to block the blows.

Prince James laughed sadistically then grabbed Emma by her hair. She screamed as he hauled her to her feet.

“And you,” he spat in her face, “Sir Baelfire wants to wed you for some bizarre reason, so for his sake, I’ll let you live.” He ran a finger down the side of Emma’s face, and she shuddered at his touch. “I don’t know why he didn’t just take you when he had the chance.”

Killian roared at his base words and managed to leap to his feet in his rage. He launched himself at Prince James, but the royal merely laughed again as he shoved the knight easily away from him, flinging him into Emma. They both fell into a heap upon the floor, and Prince James spat upon them both.

“Enough of this,” he snarled, “I have a castle to fortify.”

The Prince strode then from the chamber, slamming the heavy oak door behind him. Emma shifted, cradling Killian’s head in her lap as he groaned in pain. She ran her fingers through his hair, shaking her head at his foolishness.

“What were you thinking, trying to attack him in your state?”

“I am a knight,” Killian groaned, “I can’t abide a man accosting a lady. I took the vow of chivalry.”

“Well, chivalry is all well and good until it gets you killed,” she quipped as she ran her hands along his torso. He cried out loudly as she touched one tender spot. “Your stab wound didn’t reopen, thank God above, but his kicks cracked your ribs all over again,” she fussed over him, “when they had just healed.”

“That explains why it hurts when I laugh.”

Emma rolled her eyes. “And whatever do you have to laugh about in our current predicament?”

“I always laugh when an enemy underestimates his foe.”

Emma helped him roll to his feet, then draped his arm over her shoulder as she helped him back to the bed. “You are brave, Sir Killian,” she grunted as she deposited him on the feather mattress, “but you are also far too cocky.”

He grinned up at her as she tucked the coverlet around him. “I wasn’t talking about me.”

Emma blushed as she turned to resume her seat beside the bed. To cover the way his praise flustered her, she retrieved the book of poetry and cleared her throat as she opened it.

“I think poetry is needed to calm our humors, don’t you agree?”

“Your voice will soothe every pain,” Killian told her with a clear note of flirtation in his voice.

That infernal blush rose to her cheeks once again as she began to read.

Alas my love you do me wrong

To cast me off discourteously;

And I have loved you oh so long

Delighting in your company.

Greensleeves was my delight,

Greensleeves my heart of gold

Greensleeves was my heart of joy

And who but my lady Greensleeves.

#cs ff #historical au #desdichado #starts out sleeping captain #captain swan is endgame #medieval au #killian as a knight #Ivanhoe au

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olko71 · 2 years ago

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New Post has been published on All about business online

New Post has been published on http://yaroreviews.info/2023/01/mortgage-rate-pain-for-first-time-buyers

Mortgage rate pain for first-time buyers

Kathryn Yabsley

By Kevin Peachey

Cost of living correspondent

Young, in good jobs and having saved hard for five years to raise a deposit, Kathryn Yabsley and her husband David were all set up to buy their first home.

Last summer, the couple were looking at the prospect of an affordable mortgage and perhaps even getting into their new place by Christmas.

Then mortgage rates soared. Now, they have been forced to rethink their plans.

“We had that excitement and thrill. So to just be shot down, I was in bits and my husband was disappointed too. It burst our bubble,” said 29-year-old Mrs Yabsley, an NHS therapy assistant from Pembrokeshire.

“We’re holding off to see if the rates go down and we’re going to rent instead.”

Caution abounds

Mortgage repayments would have been £300 more a month than their initial, in-principle, deal had suggested. With all the costs of bringing up a little boy, they realised every penny of their wages would be spent on bills.

“I don’t want to just survive, I want to live as well,” she said.

They are far from alone in their wait-and-see approach. On Friday, the Halifax – part of Lloyds Banking Group, the UK’s biggest mortgage lender – said it expected buyers and sellers to “remain cautious” over the coming year.

House prices would drop as a result, the Halifax said, by as much as 8% this year. While that may be good news for first-time buyers like Mrs Yabsley, it would need to go hand-in-hand with falling mortgage rates to make their plans affordable again.

The cost of a new, fixed-rate mortgage has been going up for a year, as lenders predicted that the Bank of England would increase its benchmark Bank rate. That rise was turbo-boosted by the mini-budget when Liz Truss was prime minister.

The plan in that budget, which promised billions of pounds of tax cuts without explaining how they would be paid for, led to turmoil on the markets, as well as a sudden withdrawal and re-pricing of mortgages.

As those proposals were dampened, then reversed, mortgage rates have started to fall again. The interest rate for a typical, new two-year fixed-rate home loan peaked at 6.65% in October, but has now dropped to 5.78%. Five-year deals, which had also topped 6%, now typically have a rate of 5.61%.

“Thankfully, mortgage rates are slowly coming down with large expectations for further falls in the upcoming months. However, both buyers and remortgage customers may put their plans on hold for the time being as they struggle with the cost of living,” said Rachel Springall, from financial information service Moneyfacts, which compiled the figures.

What happens if I can’t afford to pay my mortgage?

What is happening to house prices?

In a nutshell, that has been the problem for many potential buyers and existing homeowners. Even though fixed mortgage rates might be dropping, they are still higher than many people would have expected and budgeted for, and certainly more expensive than they have been accustomed to in the past decade. At the same time, their finances are stretched by rising energy and food bills.

As many as two million homeowners will have a fixed-rate deal that expires this year, and face a new deal that costs more in repayments each month. Those on variable rates are likely to pay more too, because the Bank rate is expected to climb further in the near future.

So, all will hope that mortgage rates do fall as the year goes on, and many are delaying any decision as a result. That has already been recorded in Bank of England data about falling mortgage approvals, and falling interest from buyers leading to lower house prices.

Mortgage brokers – who search the market for the best deals – are somewhat united in their view that the picture will improve.

“We expect that rates will continue to decrease and that remortgage and purchase activity will increase over the coming months,” said Jed Newton, director at Trinity Financial, noting that many clients have delayed mortgage applications.

David Hollingworth, from London and Country Mortgages, said that better deals were already available.

“Calmer funding conditions mean that lenders have been able to cut their fixed-rate deals and five-year fixed rates are now available below 4.5% as a result,” he said.

“We could see further improvements as competition between lenders heats up. In a slower market, [mortgage providers] will be keen to attract greater volume and competition is likely to benefit borrowers looking for a new deal.”

He suggested there were some pitfalls with a wait-and-see approach, as variable and tracker deals – which may appear cheap now – were likely to get more expensive.

Some homeowners might also be considering extending their mortgage term to cope with the approaching payment shock.

“That comes at a cost, as it can push up the overall interest charge substantially,” he said.

As for Mrs Yabsley, the prospect of owning their own home must remain wishful thinking for a while yet.

“We have accepted it, but if I could win the lottery tomorrow, I would buy myself a house,” she said.

More on this story

What happens if I can’t afford to pay my mortgage?

8 December 2022

Mortgage approvals sink to lowest level in two years

2 days ago

House prices drop for fourth month in a row

12 hours ago

What is happening to house prices?

8 December 2022

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atlanticcanada · 2 years ago

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What the latest Bank of Canada rate hike means for inflation, consumers

The Bank of Canada hiked its key policy rate by half a percentage point to 4.25 per cent -- the highest it's been since January 2008 -- on Wednesday in its final rate decision of a year that has been marked by stubbornly high inflation and rapidly increasing interest rates.

The bank, which has made a steady succession of large hikes over the course of the year, is widely believed to be nearing an end to the increases.

In announcing the rate hike Wednesday, the bank said it will consider whether the rate "needs to rise further to bring supply and demand back into balance and return inflation to target."

Here's a look at what the rate means, how analysts are interpreting it and what it could mean for consumers.

What is the key policy rate and what does it do?

The key policy rate, also known as the target for the overnight rate, is how much interest the Bank of Canada wants commercial banks to charge when lending each other money overnight to settle daily balances.

Knowing how much it costs to lend money, or deposit it with the central bank, helps set the interest rates charged on things like loans and mortgages.

Lowering the rate generally makes borrowing money more affordable, while raising it makes such activities more expensive.

Why is the bank using the rate to target inflation?

Inflation is a measure of how much prices of goods and services are rising or falling. High inflation is a sign of an economy that's overheating.

Canada's annual inflation rate reached a peak of 8.1 per cent in June, the highest level in four decades.

It has eased since then, reaching 6.9 per cent in September, but didn't budge in October. And shoppers have seen higher prices for common expenses like groceries. Grocery prices have been rising at the fastest pace in decades and were 11 per cent higher in October than they were a year ago.

Economists and the central bank want to see a further easing, which is why interest rates have been rising so quickly in the hope of cooling consumer spending patterns.

"Inflation is still too high and short-term inflation expectations remain elevated," the bank said in its announcement. "The longer that consumers and businesses expect inflation to be above the target, the greater the risk that elevated inflation becomes entrenched."

What does this mean for my mortgage?

Mortgage rates tend to increase or decrease in tandem with interest rates.

When Canadians buy homes there are two kinds of mortgages they can select -- fixed rate or variable. Fixed-rate mortgages allow borrowers to lock in the interest rate they will pay for a set amount of time, while variable-rate mortgages can fluctuate.

Allison Van Rooijen, vice-president of consumer credit at Meridian Credit Unit, estimates the rate hike Wednesday will bump payments on a $450,000 variable-rate mortgage on a 25-year amortization up another $130 or so every month. Since the beginning of 2022, rising rates have amounted to roughly $1,000 more per month since the beginning of 2022.

"Because of the high cost of housing in Canada and years of low borrowing rates, Canadians are carrying record-levels of debt on mortgages and lines of credit, so it's really important that people go through their expenses and look to scale back discretionary spending where they can," she said in an email.

She recommends people double down on efforts to pay off debt with higher interest rates as much as possible and if they are running into trouble making payments, discuss whether switching to another format of mortgage is right for them.

Does this mean interest rates will stop rising soon?

Shortly after the announcement, many economists predicted the bank isn't done with hikes yet, even though the language in the statement signalled the possibility of holding steady at 4.25 per cent.

BMO Capital Markets chief economist Douglas Porter said a further hike of about 25 basis points is likely still to come because he's concerned about the "stickiness of underlying inflation."

James Orlando of TD Economics agreed. He expects the bank will deliver its final rate hike for the foreseeable future in January, bringing the measure to 4.5 per cent.

"We don't think the Bank of Canada is done yet, but it is quickly approaching the end of its hiking cycle," he wrote in a note to investors.

"As all Canadians know, the rapid rate hikes over 2022 have caused a dramatic adjustment in the real estate market, and we are starting to see this in consumer spending data. We expect this to continue to weigh on the economy over 2023 as the lagged effects of past hikes filter through."

This report by The Canadian Press was first published Dec. 7, 2022.

from CTV News - Atlantic https://ift.tt/Z9p2IiS

#new brunswick #prince edward island #nova scotia #news #politics #canada #CTVAtlantic

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petnews2day · 2 years ago

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When will Australian interest rates stop rising?

New Post has been published on https://petnews2day.com/pet-industry-news/pet-financial-news/when-will-australian-interest-rates-stop-rising/

When will Australian interest rates stop rising?

Higher borrowing costs have taken a large bite out of property prices in recent months, and with more rate hikes to come we likely haven’t seen the bottom of this current downturn.

But when will the Reserve Bank of Australia next make a move? And when will its aggressive monetary policy tightening finally come to an end? We take a look below.

Interest rates set to go up in December

The RBA has lifted interest rates at seven consecutive meetings this year, including a devastating four-month stretch of 50 basis point hikes from June to September.

The cash rate is now 275 basis points higher than it was when the tightening cycle began – nearly matching the 3% buffer banks tack onto their rates when assessing borrowers’ serviceability.

While limits are certainly being tested, the good news is that with unemployment currently at all-time lows, a material increase in mortgage arrears seems unlikely.

The central bank is widely expected to continue lifting rates, with Westpac economists pencilling in four more 25 basis point hikes in December, February, March and May and a terminal rate of 3.85%.

Meanwhile, CommBank believes the RBA will deliver just one more increase in December, which would leave us with a cash rate of 3.10% going into next year.

How do we account for such different forecasts? For one, CBA has been much less hawkish on rates than its big bank peers, calling for caution in light of lags in the transmission of rate hikes.

Westpac, on the other hand, has emphasised the need for strong action to keep inflation from getting out of hand.

“The risk is that a ‘high inflation’ psychology emerges and is allowed to be sustained for longer, potentially making the challenge of bringing inflation back to target more difficult than necessary,” said Westpac chief economist, Bill Evans.

How far have property prices fallen?

Seven months of rate hikes have taken a heavy toll on the property market, with Sydney prices falling -10.2% since January and Melbourne prices down -6.4% since peaking in February.

But CoreLogic research director, Tim Lawless said the current downturn has been “orderly,” at least when compared to the frenzied growth the market experienced last year.

“This is supported by a below-average flow of new listings that is keeping overall inventory levels contained,” he said.

“There’s also tight labour market conditions, an accrual of borrower savings and a larger than normal cohort of fixed interest rate borrowers, who have so far been insulated from the rapid rise in interest rates.”

RELATED: Australia’s housing downturn enters its sixth month

Among other capital cities, home values dropped by -5.4% over the quarter in Brisbane, -4.3% in Canberra, and -4.1% in Hobart. Perth and Adelaide prices have been much more resilient in comparison, falling just -0.7% and -0.6%, respectively.

According to CommBank’s Household Spending Intentions (HSI) index, plans to buy a home declined by -3.1% in October and were down -27.3% over the year.

The bank says the impact of this year’s rate hikes hasn’t yet been fully felt, warning that further weakness will begin to show in the market in the coming months.

It expects a 15% fall in home values from peak-to-trough, though the downturn could be steeper if the RBA pushes the cash rate beyond CBA’s 3.10% forecast.

For more information on property and lending trends, head over to our home loan statistics page. And if you’re in the market for a home loan, visit our home loan comparison page, or browse the selection below.

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don’t consider your personal objectives, financial situation or needs and we aren’t recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don’t cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

#Pet Financial News

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continuations · 6 years ago

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World After Capital: UBI is Affordable

NOTE: I have been posting excerpts from my book World After Capital. Today’s section provides some back of the envelope calculations to show we can afford UBI to provide economic freedom for all.

UBI is Affordable

So with all of this as background, your might wonder what a Universal Basic Income should pay. My working proposal for the United States is $1,000/month for everyone over age 18, $400/month for everyone over 12 years old, $200/month for every child. These numbers might seem extremely low, but keep in mind, the goal here isn't to make people well off; it's simply to let them take care of their basic needs. We have mistakenly come to embrace unlimited wants, and we can free ourselves from this by re-establishing a clear distinction between wants and needs. We should also remember that our basic needs will get cheaper over time, and we won't get UBI overnight. So my numbers are meant to work over time as other government programs are phased out and a UBI is phased in. Other policies I will discuss will also serve to help bring down the cost of education and healthcare.

Let's dig further into these numbers. While everyone will spend their UBI in different ways, a possible allocation for a typical adult would roughly break down as follows: $300/month for housing, $300/month for food, $100/month for transportation, $50/month for internet access and associated equipment.

You might wonder why I am proposing a lower payment for children and teenagers. First, we can meet many of their basic needs even more cheaply than we can for adults (for instance, several kids in a family might share a room). Second, I propose a lower payment in recognition of historic evidence that the number of children people have is partially determined by economics. UBI should not give an incentive to adults to have more children so as to “skim” their income. That's especially important with regard to slowing down and eventually stopping population growth: We want the birth rate to decline globally, as it has started to do in most industrialized nations in conjunction with economic progress and the decline in infant mortality. This will allow us to achieve peak population and put to rest the Malthusian fears of overpopulation and scarcity.

When you calculate how much money is required to provide a UBI for everyone in the United States based on the 2015 population size, you wind up with about $3 trillion annually [76] [77]. While that's a huge number, it only represents about 17% of the size of the economy as measured by 2015 GDP, and only about 10% considered as a percentage of 2015 Gross Output (the latter measures not just final output but also intermediate steps) [78] [79] [80] .

Where will this money come from? There are two sources: government budgets (at the local, state and federal level) and money creation. I will examine each of these in turn.

In the U.S., in 2015 total government revenues from taxation and fees were about $6 trillion or about twice the UBI amount [81]. So in theory the money for a UBI could come entirely from redirecting existing budgets. There would then be another $3 trillion of money for critical government activities, such as local law enforcement and national defense (the latter was $0.6 trillion in 2015 [82]). There is a long debate to be had about the political process by which such a reallocation can be accomplished but there is no fundamental impossibility, such as perpetually increasing government debt.

Having a UBI can also substantially increase government revenues. How so? At the moment there are many people who work but fall below the level for paying federal income tax. In fact this is true for nearly half of all earners (Mitt Romney's infamous 47 percent remark). Once people have a UBI, then every additional dollar earned should be taxed. For instance, if you are single and make $10,000 at present you do not even need to file a federal income tax return at all. With a UBI that could be taxed at a rate of say 25% generating $2,500 in new tax revenues. This effect could provide as much as $0.3 trillion or about a 5% increase in total government revenues. Of course people who are already paying taxes today would also effectively be paying back some of their UBI in the form or higher taxes. Applying a 25% tax rate for that group which would receive roughly half of all payouts, i.e. roughly $1.5 trillion, results in an additional $0.4 trillion. Another way of saying this is that the net burden of a UBI with a 25% federal tax rate applied to the first dollar earned is about $2.3 trillion.

Moreover, government revenues can be expanded in ways that accomplish other goals at the same time. For instance, we could and should be taxing pollution more than we are, in particular the emission of greenhouse gases into the atmosphere. Taxes are a well established way of dealing with negative externalities and we have made good use of that, for instance by aggressively taxing cigarette smoking, which has resulted in dramatically diminished consumption. Estimates of the revenue potential for a carbon tax are somewhere in the $0.3 trillion dollar range annually and potentially even higher. So between offsets via income tax (which will occur automatically) and a greenhouse gas tax (which we need in any case) we are down to about $2 trillion. Now that's still a massive number. On the other hand, for comparison, Social Security and Medicare/Medicaid are about $1 trillioneach. So in the extreme UBI could be financed through a massive reallocation of existing programs.

There is another way though to provide much or all of UBI by changing how money is created in the economy. This involves moving away from fractional reserve banking and issuing money directly to people instead. In today's fractional reserve banking system, commercial banks extend more credit than they have deposits. This carries with it the potential of a bank run and the Federal Reserve Bank (Fed) acts as the so-called “lender of last resort.” For instance, in the 2008 financial crisis the Fed stepped in aggressively by buying up potentially bad bank assets to give banks liquidity. Europe has had a policy of “quantitative easing” (QE) where the central bank makes it progressively easier for commercial banks to extend loans beyond their existing deposits.

Generally the idea is that as banks extend loans this will help grow the economy as the banks will lend to businesses that need to finance capital good or working capital. While banks have done that to some degree, they have also been lending to people who are already wealthy for acquiring second and third homes or for engaging in financial speculation. Conversely, bank lending to small businesses has actually been going down as banks have consolidated and have focused on larger customers. The net result of all of this has been that quantitative easing has amplified wealth and income inequality.

An alternative system would be to remove banks from money creation by forcing them to hold all of their deposits at the Fed. This is known as “full reserve banking” and eliminates all risk from the commercial banks. Credit extension could instead happen via marketplace lending as enabled by companies such as Lending Club, for individuals, and Funding Circle, for businesses (both former USV portfolio companies). This would allow money creation to happen by simply giving new money to people as part of their UBI payments, which is sometimes referred to as “QE for the people.”

What magnitudes are we talking about here? In the United States we have unfortunately stopped tracking the larger monetary aggregates, such as M3 and are only using narrower measures, such as M2 (M0, M1, M2, and M3 are different measures of how much money has been created in the economy). Even the M2 measure though has been growing by about $1 trillion annually over the last decade. The actual amount of money created in the economy by quantitative easing is likely to be much bigger. We can consider the development of debt more directly. U.S. households have about $8 trillion in mortgage debt [83], over $1 trillion in auto loans [84], over $1 trillion in student loans [85] and nearly $1 trillion in credit card debt [86]. Total household debt can go up as much as $1 trillion in a single year. U.S. business debt is a total of $25 trillion, of which about $15 trillion is in the financial sector and $10 trillion in non-financial businesses. These too have grown by as much as $1 trillion in a year.

As a first approximation the amount of annual money creation is in the trillions of dollars and thus in the same ball park as UBI. Historically, the idea of the government “printing” money is associated with fears of runaway inflation, such as occurred in the Weimar Republic. There are several reasons why this would not be the case with a proper UBI scheme. First, the amount of new money creation would be fixed and known in advance. Second, as we saw earlier, technology is a strong deflationary force. Third, the amount of net money creation over time can be reduced by also removing money from the economy. This could be accomplished through negative interest rates on bank deposits above a certain amount where the payment is collected by the central bank (and not by the commercial bank). This is known as “demurrage” and would be easy to implement in a full reserve banking system.

I expect that the path to UBI will involve some mix of changes to government budgets, taxation and the monetary system. One exciting possibility is that the change to the monetary system can come about through newly created crypto currencies. No matter how we eventually get there, what the back of the envelope math above shows is that UBI is in fact affordable. Economic freedom for all is possible, if we want it.

#world after capital #ubi #basic income

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orbemnews · 4 years ago

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People are panic buying homes as prices skyrocket around the world “This time last year we thought it was going to be 2008 all over again,” said Kate Everett-Allen, the head of international residential research at real estate consultancy Knight Frank. The fear was that house prices would collapse, as they reliably had done in past economic downturns. An increase in bankruptcies and unemployment would squeeze disposable incomes and make it difficult for highly indebted homeowners to keep up with their mortgages. Those fortunate enough to own second homes would be forced to sell to build up cash reserves, putting even more downward pressure on prices. “Actually, none of that happened,” added Everett-Allen. Instead, house prices soared even as the world suffered its worst slump since the Great Depression. From New Zealand to the United States, Germany, China and Peru, the same phenomenon has taken hold: home prices are skyrocketing, and many buyers are panicking. Among the 37 wealthy countries that make up the Organization for Economic Cooperation and Development (OECD), real house prices rose by almost 7% between the fourth quarter of 2019 and the fourth quarter of 2020 — the fastest year-on-year growth in the past two decades. So is this a bubble about to burst? No, according to Everett-Allen. Borrowing remains cheap and, once borders reopen, foreign investors will provide even further impetus to property markets, where purchasing activity has been largely driven by domestic buyers, she said. “That will play out over the course of the rest of this year and next, and then there might be something of a lull,” she added. The Covid effect In an unexpected twist, the pandemic has benefited house prices. That’s because governments around the world helped homeowners by temporarily banning repossessions and providing trillions of dollars of support for workers and businesses. Interest rate cuts kept mortgage repayments affordable in many places, while temporary reductions to purchase taxes in some markets spurred home buying. These measures cushioned the housing market from the coronavirus recession. But the pandemic itself has actually turbocharged prices. “If you lock up the vast majority of the population for months, they [rapidly reassess] what they want from their homes,” said Richard Donnell, research director at UK property platform Zoopla. As people were forced to transform houses into offices and classrooms, it didn’t take long for a “race for space” to take hold. Wealthier individuals in several countries have fled cities for larger suburban homes with more outdoor space in the anticipation that they won’t need to commute into central offices as much even after the pandemic ends. Many of them are financially in a better position than they were before the pandemic hit, since they’ve spent less on vacations and eating out, and can therefore spend more on house purchases. For example, in the United Kingdom, commuter towns within easy reach of London, such as Bishop’s Stortford and Winchester, have seen property values surge. “Anything with a home office within an hour train ride of London is going for 10% above market value,” according to Daniel Harrington, international head of growth at upmarket estate agent Fine & Country. One trend Harrington has observed in capitals such as London and Paris sees wealthy executives trading their centrally located houses for something bigger but cheaper further out of the city, leaving them with enough cash to buy a small apartment downtown and a holiday home elsewhere. That’s heightened domestic demand for property in places such as the French Riviera, which is traditionally dominated by foreign buyers. In the seaside resort town of Ilfracombe in southwest England, Lee Hussell, the director of estate agency Webbers, has sold two properties in recent months for £100,000 ($139,000) above the asking prices. “In 38 years of buying and selling homes I haven’t witnessed a market like it,” commented Henry Pryor, a UK buying agent. “There have been stories of buyers paying £10,000 ($14,100) plus just to be able to view a property.” With inventory levels in the United Kingdom some 30% below the norm, people are “panic-buying properties,” Pryor added. Transactions have been tracking above average every month since November, with March notching 180,000 sales, almost double the average for the same month over the past 20 years. “Twelve months ago, people were panic buying toilet paper for fear they might run out. That’s very much the sensation we have today [in the housing market],” he said. House prices in Britain surged 8.5% in 2020 despite the worst recession in more than three centuries. That’s the highest annual growth rate since 2014, according to the Office for National Statistics. And it’s not just the United Kingdom. In the United States, the number of sales of existing homes reached the highest level in 2020 since 2006, according to the National Association of Realtors. House prices rose 9% in 2020 and have continued to climb, with the median price of an existing home hitting a historic high of $329,100 in March. In one staggering example of how frenzied the market has become, realtor Ellen Coleman received 76 all-cash offers on a $275,000 fixer-upper in suburban Washington D.C. within three days of listing the property. The four-bedroom, 1,800 square-foot home sold for $460,000, a 70% increase on the asking price. From Auckland to Shanghai, Munich and Miami, house prices appear to be defying gravity. In Germany, properties are selling within two weeks of being listed and brokers are struggling to secure listings, according to Michael Heming, master licensee for Fine & Country in Germany, Austria and Switzerland. “It’s a very strong market and prices are going higher and higher,” Heming told CNN Business. In Portugal, foreigners have been snapping up houses despite not being able to view the properties they’re buying. Prices there jumped 6% in the fourth quarter of 2020 compared with the same period a year earlier, according to Knight Frank data. Despite having no visitors from traditionally strong buyer markets, such as Brazil, Britain, France and Belgium, the first three months of 2021 has already broken sales records, according to Charles Roberts, Fine & Country Portugal’s managing partner. “We have sold quite a lot of that blind,” Roberts said, adding that foreign buyers want fresh air, open space and a picturesque bolthole to escape to for the next pandemic. “When travel opens up, I think we’re in for three months of pandemonium.” He recently sold an apartment in coastal Cascais, just west of Lisbon, for €3.5 million ($4.2 million) to a South African who has never visited the town. In India, prices have declined following a 6.9% slump in GDP last year, but transactions surged following the end of the first lockdown. “Covid led to activity coming back into the market,” said Hitesh Oberoi, the CEO of Info Edge, which owns India’s largest property portal, 99acres.com. “A lot of people want bigger homes,” he added. “Many people felt that because the economy was tanking they would get good deals.” Oberoi said that falling interest rates and lower duties on transactions in some parts of the country have also helped, but that the market is slowing down once again as India battles a devastating second wave of the virus. Governments move to cool markets In several countries, governments are already looking at ways to prevent their housing markets from overheating. In New Zealand — where median prices for residential property increased by more than 24% over the year to March to a record high — the government is under pressure to stabilize the market, according to Wendy Alexander, the acting CEO of the Real Estate Institute of New Zealand. In March, the government announced a string of measures that they hope will “cool demand from investors” and slow the pace of price growth, Alexander said. For example, tax loopholes have been tightened and ministers are considering clamping down on interest-only loans to speculators. In China, where house prices in “tier-1 cities” including Beijing, Shenzhen, Shanghai and Guangzhou rose by 12% on average year-on-year in March, “Beijing is more determined than ever to rein in property leverage,” analysts at Societe Generale said in a note last week. “Over 30 cities, accounting for one-fifth of national sales in 2019, have rolled out major tightening measures,” said Michelle Lam, Societe Generale’s greater China economist. “These include buying and selling restrictions, credit restrictions, increasing the holding period for tax exemptions and fixing loopholes via fake divorces,” she added. In the past, some couples have filed for divorce to get around caps that limit property ownership for families. But even with greater curbs in place, Societe Generale analysts expect the correction in house prices in China to be modest given that lending conditions will remain favorable and because of sound demand for urban property, limited supply in top-tier cities and persistent interest in property investment. Banking regulators elsewhere could also tighten mortgage lending rules in order to cool markets, according to Matthias Holzhey, head of Swiss real estate investments at UBS, who points to regulation more broadly as a possible threat to house price growth. For example, policymakers could increase taxes on land and transactions, particularly as governments seek to repair public finances following the pandemic. Why the boom is unlikely to bust But even as governments train their sights on the housing market, analysts are not predicting a house price correction. Global economic growth is projected to be much stronger this year, as vaccines are rolled out and lockdown restrictions ease, which will be supportive of housing markets. Crucially, interest rates are expected to remain low. “Historically, periods of weak house prices have been triggered by rising interest rates,” said Holzhey. Rock bottom rates have been a key driver of prices, particularly in the United States and Europe, because they make borrowing more affordable. Mortgage rates across the 19 countries that use the euro averaged just 1.3% in March, according to official statistics. Even with inflation edging higher, policymakers are expected to keep interest rates low to secure the recovery. They may have to change tack if prices keep rising and hold steady at higher levels, but major central bankers have been at pains to stress they’re comfortable to let their economies run hotter than normal if it will help juice growth and create jobs. “Mortgage rates will remain structurally low and supportive of market growth for the next couple of years,” said Adam Challis, Jones Lang LaSalle’s executive director for research and strategy across Europe, the Middle East and Africa. In other words, don’t expect this boom to bust any time soon. — Anna Bahney contributed reporting. Source link Orbem News #buying #homes #PANIC #People #Prices #skyrocket #World

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dipulb3 · 4 years ago

Text

People are panic buying homes as prices skyrocket around the world

New Post has been published on https://appradab.com/people-are-panic-buying-homes-as-prices-skyrocket-around-the-world/

People are panic buying homes as prices skyrocket around the world

“This time last year we thought it was going to be 2008 all over again,” said Kate Everett-Allen, the head of international residential research at real estate consultancy Knight Frank.

The fear was that house prices would collapse, as they reliably had done in past economic downturns. An increase in bankruptcies and unemployment would squeeze disposable incomes and make it difficult for highly indebted homeowners to keep up with their mortgages.

Those fortunate enough to own second homes would be forced to sell to build up cash reserves, putting even more downward pressure on prices.

“Actually, none of that happened,” added Everett-Allen.

Instead, house prices soared even as the world suffered its worst slump since the Great Depression. From New Zealand to the United States, Germany, China and Peru, the same phenomenon has taken hold: home prices are skyrocketing, and many buyers are panicking.

Among the 37 wealthy countries that make up the Organization for Economic Cooperation and Development (OECD), real house prices rose by almost 7% between the fourth quarter of 2019 and the fourth quarter of 2020 — the fastest year-on-year growth in the past two decades.

So is this a bubble about to burst? No, according to Everett-Allen. Borrowing remains cheap and, once borders reopen, foreign investors will provide even further impetus to property markets, where purchasing activity has been largely driven by domestic buyers, she said.

“That will play out over the course of the rest of this year and next, and then there might be something of a lull,” she added.

The Covid effect

In an unexpected twist, the pandemic has benefited house prices.

That’s because governments around the world helped homeowners by temporarily banning repossessions and providing trillions of dollars of support for workers and businesses. Interest rate cuts kept mortgage repayments affordable in many places, while temporary reductions to purchase taxes in some markets spurred home buying.

These measures cushioned the housing market from the coronavirus recession. But the pandemic itself has actually turbocharged prices.

“If you lock up the vast majority of the population for months, they [rapidly reassess] what they want from their homes,” said Richard Donnell, research director at UK property platform Zoopla.

As people were forced to transform houses into offices and classrooms, it didn’t take long for a “race for space” to take hold.

Wealthier individuals in several countries have fled cities for larger suburban homes with more outdoor space in the anticipation that they won’t need to commute into central offices as much even after the pandemic ends.

Many of them are financially in a better position than they were before the pandemic hit, since they’ve spent less on vacations and eating out, and can therefore spend more on house purchases.

For example, in the United Kingdom, commuter towns within easy reach of London, such as Bishop’s Stortford and Winchester, have seen property values surge.

“Anything with a home office within an hour train ride of London is going for 10% above market value,” according to Daniel Harrington, international head of growth at upmarket estate agent Fine & Country.

One trend Harrington has observed in capitals such as London and Paris sees wealthy executives trading their centrally located houses for something bigger but cheaper further out of the city, leaving them with enough cash to buy a small apartment downtown and a holiday home elsewhere.

That’s heightened domestic demand for property in places such as the French Riviera, which is traditionally dominated by foreign buyers.

In the seaside resort town of Ilfracombe in southwest England, Lee Hussell, the director of estate agency Webbers, has sold two properties in recent months for £100,000 ($139,000) above the asking prices.

“In 38 years of buying and selling homes I haven’t witnessed a market like it,” commented Henry Pryor, a UK buying agent. “There have been stories of buyers paying £10,000 ($14,100) plus just to be able to view a property.”

With inventory levels in the United Kingdom some 30% below the norm, people are “panic-buying properties,” Pryor added. Transactions have been tracking above average every month since November, with March notching 180,000 sales, almost double the average for the same month over the past 20 years.

“Twelve months ago, people were panic buying toilet paper for fear they might run out. That’s very much the sensation we have today [in the housing market],” he said.

House prices in Britain surged 8.5% in 2020 despite the worst recession in more than three centuries. That’s the highest annual growth rate since 2014, according to the Office for National Statistics.

And it’s not just the United Kingdom. In the United States, the number of sales of existing homes reached the highest level in 2020 since 2006, according to the National Association of Realtors.

House prices rose 9% in 2020 and have continued to climb, with the median price of an existing home hitting a historic high of $329,100 in March.

In one staggering example of how frenzied the market has become, realtor Ellen Coleman received 76 all-cash offers on a $275,000 fixer-upper in suburban Washington D.C. within three days of listing the property. The four-bedroom, 1,800 square-foot home sold for $460,000, a 70% increase on the asking price.

From Auckland to Shanghai, Munich and Miami, house prices appear to be defying gravity.

In Germany, properties are selling within two weeks of being listed and brokers are struggling to secure listings, according to Michael Heming, master licensee for Fine & Country in Germany, Austria and Switzerland. “It’s a very strong market and prices are going higher and higher,” Heming told Appradab Business.

In Portugal, foreigners have been snapping up houses despite not being able to view the properties they’re buying. Prices there jumped 6% in the fourth quarter of 2020 compared with the same period a year earlier, according to Knight Frank data.

Despite having no visitors from traditionally strong buyer markets, such as Brazil, Britain, France and Belgium, the first three months of 2021 has already broken sales records, according to Charles Roberts, Fine & Country Portugal’s managing partner. “We have sold quite a lot of that blind,” Roberts said, adding that foreign buyers want fresh air, open space and a picturesque bolthole to escape to for the next pandemic. “When travel opens up, I think we’re in for three months of pandemonium.”

He recently sold an apartment in coastal Cascais, just west of Lisbon, for €3.5 million ($4.2 million) to a South African who has never visited the town.

In India, prices have declined following a 6.9% slump in GDP last year, but transactions surged following the end of the first lockdown.

“Covid led to activity coming back into the market,” said Hitesh Oberoi, the CEO of Info Edge, which owns India’s largest property portal, 99acres.com. “A lot of people want bigger homes,” he added. “Many people felt that because the economy was tanking they would get good deals.”

Oberoi said that falling interest rates and lower duties on transactions in some parts of the country have also helped, but that the market is slowing down once again as India battles a devastating second wave of the virus.

Governments move to cool markets

In several countries, governments are already looking at ways to prevent their housing markets from overheating.

In New Zealand — where median prices for residential property increased by more than 24% over the year to March to a record high — the government is under pressure to stabilize the market, according to Wendy Alexander, the acting CEO of the Real Estate Institute of New Zealand.

In March, the government announced a string of measures that they hope will “cool demand from investors” and slow the pace of price growth, Alexander said. For example, tax loopholes have been tightened and ministers are considering clamping down on interest-only loans to speculators.

In China, where house prices in “tier-1 cities” including Beijing, Shenzhen, Shanghai and Guangzhou rose by 12% on average year-on-year in March, “Beijing is more determined than ever to rein in property leverage,” analysts at Societe Generale said in a note last week.

“Over 30 cities, accounting for one-fifth of national sales in 2019, have rolled out major tightening measures,” said Michelle Lam, Societe Generale’s greater China economist.

“These include buying and selling restrictions, credit restrictions, increasing the holding period for tax exemptions and fixing loopholes via fake divorces,” she added. In the past, some couples have filed for divorce to get around caps that limit property ownership for families.

But even with greater curbs in place, Societe Generale analysts expect the correction in house prices in China to be modest given that lending conditions will remain favorable and because of sound demand for urban property, limited supply in top-tier cities and persistent interest in property investment.

Banking regulators elsewhere could also tighten mortgage lending rules in order to cool markets, according to Matthias Holzhey, head of Swiss real estate investments at UBS, who points to regulation more broadly as a possible threat to house price growth.

For example, policymakers could increase taxes on land and transactions, particularly as governments seek to repair public finances following the pandemic.

Why the boom is unlikely to bust

But even as governments train their sights on the housing market, analysts are not predicting a house price correction.

Global economic growth is projected to be much stronger this year, as vaccines are rolled out and lockdown restrictions ease, which will be supportive of housing markets.

Crucially, interest rates are expected to remain low. “Historically, periods of weak house prices have been triggered by rising interest rates,” said Holzhey.

Rock bottom rates have been a key driver of prices, particularly in the United States and Europe, because they make borrowing more affordable. Mortgage rates across the 19 countries that use the euro averaged just 1.3% in March, according to official statistics.

Even with inflation edging higher, policymakers are expected to keep interest rates low to secure the recovery. They may have to change tack if prices keep rising and hold steady at higher levels, but major central bankers have been at pains to stress they’re comfortable to let their economies run hotter than normal if it will help juice growth and create jobs.

“Mortgage rates will remain structurally low and supportive of market growth for the next couple of years,” said Adam Challis, Jones Lang LaSalle’s executive director for research and strategy across Europe, the Middle East and Africa.

In other words, don’t expect this boom to bust any time soon.

— Anna Bahney contributed reporting.

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