spockety wrote: » These are the figures which come from a guy who reckons that on a ~270K mortgage, interest rates going up to 20% only increase the monthly repayment by about 450 euro???? :eek: :eek: :eek: :eek:
john_boy_123 wrote: » I think the other John made good sense with his whole argument did you read his comparison of a guy who is a pessimist renting for 900 a month and then the place next to it going for 295 it makes a complete mockery of what your trying to say Calina. Also have a look at zyx's comments. As for control of 2nd hand property if they go into default where do they go Nama...who controls Nama the gov therefore indirectly they do control 2nd hand property that go into default.
alfranken wrote: » Are people still doing the rent is dead money arguement?
Diarmuid wrote: » Unfortunately for zyx, his figures are pie in the sky stuff.
john_boy_123 wrote: » I think the other John made good sense with his whole argument did you read his comparison of a guy who is a pessimist renting for 900 a month and then the place next to it going for 295 it makes a complete mockery of what your trying to say Calina. Also have a look at zyx's comments.
john_boy_123 wrote: » As for control of 2nd hand property if they go into default where do they go Nama...who controls Nama the gov therefore indirectly they do control 2nd hand property that go into default.
ZYX wrote: » Well I based the figures on AIBs 10 year mortgage, Gurramocks rent and estimated price for his appartment which he seemed to agree with. Where are the figures "pie in the sky"? You can argue all you want about where you think prices are going and whether to buy or not. It still does not change the fact that it is cheaper to buy Gurramoks appartment now than it is to rent. It may become even cheaper in the future, I am not disagreeing with that but the figures I gave are not "Pie in the Sky"
gurramok wrote: » Hold on. Are you expecting wages to double in after yr 10 so I can afford doubling of repayments? 10yr fixed is good alright, its what happens afterwards that would put me on the street!
ZYX wrote: » Well Gurramok, you think interest rates will average 8.5% in 10 years time. I doubt it but I suppose you never know. However I bet your rent will be higher than 900 a month. If we have inflation averaging 5% then you can expect your rent to be €1450 in 10 years, and more than double to €1870 in 15 years and €2400 in 20 years. Unless you believe average interest rates are going to be 12% or so then you can expect your rent to average higher than your interest repayments
gurramok wrote: » My rent is not determined by inflation, its determined by supply and demand.
gurramok wrote: » Where are you getting your mortgage figures from? I went to AIB website and the best they offer is 5yr fixed on the FTB package for a 271k 2.92%IR 25yr mortgage (24k deposit)which works out at 1408 a month.http://www.aib.ie/personal/mortgages/New-Mortgage-Interest-Rates gives the 10yr one but it does not come up for a FTB for calculating?
spockety wrote: » I don't think that in a normal market there's a lot to argue in terms of renting vs buying in the long term. As you point out, for the mortgage holder their monthly repayment remains relatively static or immune to inflation as well as having a finite life of repayments, while the renter suffers inflation and pays for life. However, we're not in a normal market. We're in a falling housing market, and a deflationary society. So making long term decisions based on todays housing prices and interest rates probably isn't very clever.
gurramok wrote: » My rent is not determined by inflation, its determined by supply and demand. Where are you getting your mortgage figures from? I went to AIB website and the best they offer is 5yr fixed on the FTB package for a 271k 2.92%IR 25yr mortgage (24k deposit)which works out at 1408 a month.http://www.aib.ie/personal/mortgages/New-Mortgage-Interest-Rates gives the 10yr one but it does not come up for a FTB for calculating?
gurramok wrote: » http://www.aib.ie/personal/mortgages/New-Mortgage-Interest-Rates gives the 10yr one but it does not come up for a FTB for calculating?
Fixed Loan Data Principal: €271,000.00 Start date: October 2009 Interest %: 4.74 End date: September 2034 Years: 25 [B]Monthly payment: 1,543.46[/B] Total interest: €192,037.87
ZYX wrote: » Well rent goes to make up inflation. I think you can assume rents will rise in next 10 years. It could be more than inflation it may be less than inflation.
20goto10 wrote: No, rents are determined by location, condition and interest rates. Interest rates go down and rents go down. People who connect the recent decline in rent with supply and demand are simply wrong. Rents have fallen because the landlords can afford to drop them. And the lag of a year or so before the decline will not be repeated the other way around. Rents will go up the moment rates are increased, possibly even before hand as the ECB are very good at giving plenty of notice. And it will have nothing to do with supply and demand. There may be some who figure any money is better than none, but only within reason.
ZYX wrote: » As I said Gurramok I am looking at interest only. If you look at repayment mortgage then while the initial repayments are higher the savings over renting are huge as per the example I gave before
20goto10 wrote: » Rents have fallen because the landlords can afford to drop them.
gurramok wrote: » There is no assumption that rents will rise over the next 10yrs. Hope you're not basing it on general inflation as thats not how it works. Rent rises/drops arising from market supply/demand contribute to overall inflation so saying inflation will rise yr on yr does not apply to every sector thats counted for calculating inflation. For the first 10years you may have a case on cheap rates, its afterwards where it bites hard for the rest of the term(more capital portion payments yes). If only 10 yr fixed mortgages were available for 10yrs Same scenario can be applied for 2 or 5yr fixed rates, its what happens after that should be looked at.
Diarmuid wrote: » AIB 10 year fixed is currently 4.74%25 years at this rate results in Fixed Loan Data Principal: €271,000.00 Start date: October 2009 Interest %: 4.74 End date: September 2034 Years: 25 [B]Monthly payment: 1,543.46[/B] Total interest: €192,037.87
Diarmuid wrote: » Now that is someone with some serious business acumen!
Diarmuid wrote: » AIB 10 year fixed is currently 4.74%25 years at this rate results in Fixed Loan Data Principal: €271,000.00 Start date: October 2009 Interest %: 4.74 End date: September 2034 Years: 25 [B]Monthly payment: 1,543.46[/B] Total interest: €192,037.87 EDIT: OF course I don't know the point of this exercise because you can't get 10 year rates for a 25 year mortgage.
ZYX wrote: » But gurramok, you are saying interest rates will double to average at 8.5% but rents will not go up much. I am not saying that is impossible but it is very unlikely.
gurramok wrote: » Thats based on amateur landlords. If they want to hike rents based on their mortgage outgoings, the tenant can simply move to a landlord who has a small mortgage who can undercut him to get the tenant hence market forces at play.
ZYX wrote: » Ok diarmuid, total interest you say is 192,037. If you rented all that time and in some fantasy world rents do not go up, then you would have paid €270,000. So as I said quids in. Based on your example you are better off by €80,000 by renting
gurramok wrote: » I see(i was getting mixed up between 5yr and 10yr). I'd be at the mercy of the variable rates then!
20goto10 wrote: » People who connect the recent decline in rent with supply and demand are simply wrong. Rents have fallen because the landlords can afford to drop them.
20goto10 wrote: » Its not hiking rates. Its getting what they need otherwise why bother? It goes for anything that involves handing over money. Yes tenants can go find a cheaper landlord but the reality of the situation is that there is an overwhelming amount of rental properties are recent purchases, have been renovated (hence remortgaged) or the landlords have simply cashed in some equity to fuel their celtic tiger lifestyles. Yes, you may find someone who bought a house in pre 2002, has never remortgaged and is renting it out at a discount to other landlords. But it's highly unlikely that someone like that is in the property business for so long (through the boom) and has not been caught up in it all.
smccarrick wrote: » If the ECB consider normalisation or rates to be in the 4.25-4.5% range for overnight rates- and the international norm is for margins to be 1.25-1.5% above ECB base rates- its a reasonable assumption that long term rates might be in the 5.75-6% range?
