to feel seething resentment towards those who profited from the house price bubble and hot anger at the Governments who allowed it to happen?

[TartyMcFarty]

You'll have to forgive my naivety here - I'm ranting about something I don't really understand.

DH and I are stuck. In 2006 we bought a (modest) property on a 100% mortgage. Foolish in hindsight, I know, but based on the advice of our IFA, the unshakeable faith of our families and society that property ownership was the way to go, and the increasing pressure at the time to get on the ladder or miss out, that was the decision we made. We then found that the lender, bastard bastard Northern Rock were unwilling to remortgage based on our lack of equity, despite us having overpaid by several thousand pounds. We couldn't shift the place, and with the agreement of a different IFA, remortgaged against the equity in my DM's property (love her!). It gets more complicated than that, but that's all that's needed here. Now we still can't sell it , our tax credits have suddenly disappeared, my pension contribution has increased (DH doesn't even have a pension) and the tracker rate is slowly increasing. We're on interest only, and as I'm part time since the having DD, with another DC on the way, there's not much of a cushion.

What's really angered me over the last couple of days is the dawning realisation of how people just a few years older than us have profited from the massive increase in property 'values'. I'm still in touch with our ex-neighbour. She bought seven years earlier than us, sold at £120k profit after 10 years (this is not London!), her partner was in a similar situation so they have ended up comfortably in a property of twice the size, renovated to a really lovely standard. Obviously my resentment isn't directed at them personally - they're good people, have profited from a stupid market and good luck to them - but it's just an illustration.

How can we possibly hope to survive in a property market that boomed by more than 3.5x in this instance alone? We can't even afford to maintain our own home to a good standard. Pay isn't moving at all, and we're currently looking at less than .75 of a pension between us. I can't even bear to think about how we'll support our DCs through HE, and the risk to my DM's home if interest rates shoot up.

I just need a rant. Those of us stupid enough to be sucked in at high LTV rates towards the peak of the market are fucked all ways, whereas people just 5 years older than us are untouchable. I know I've only given one example for which I know the exact figures, but there are others I can think of in the same lucky situation. There just doesn't seem to be any point in trying when you compare our situation with those who profited so enormously in the 00s.

Thanks for that YellowWellies.I think you are right about the wage inflation.
Have you any further ideas about inflation and the timescale of it?

OP your tracker shouldn't not being increasing as the baserate hasn't increased - that is something you should query with your bank?

We also got a 100% mortgage. They offered us 7 x joint salaries and we took 3.5 x joint salaries. Luckily we're also on a tracker and we're paying less than most people atm - not sure how long this will last though!

I think four of the major high street banks have now raised their SVR even though the Bank of England base rate hasn't risen. The costs of raising money on the markets and the interbank loan rate (LIBOR) have risen because everyone in the financial world is a lot more aware of how risky our current situation is (and how the bailouts just papered over the cracks without solving anything). Hence the banks are passing on their costs to their consumers - most of whom (those with a high LTV, in negative equity, with a bad credit rating or on an IO) aren't really in a position to shop around. Look at the small print, there'll be a clause stating, disingenuously, why a BOE tracker doesn't have to track the BOE rate despite what the product's name seems to suggest.

As for how long this inflation is going to last? It strikes me the government is trying to use inflation to inflate away government debts and that all major currencies are trying to do the same thing - so we have a competitive race to devalue currencies. Which is all well and good so long as you don't rely on imports for important things like errrrr energy and food. So yes, I imagine this inflation is the new normal. Especially with peak oil looking like it occurred in 2007 - the cost of energy and energy intensive products (food, imported goods) is only set to rise. So yes, not a good idea to assume that the next 20 years are anything like the last.

OP honestly - I would think about cutting your losses - hoping for a salvation that isn't going to happen will be incredibly stressful. You also don't have demographics on your side - the huge baby boom generation is now retiring and many will consider downsizing to free up their property wealth - when this happens the market will face a glut of sellers all trying to sell to the generations under them who are much poorer than them and can't afford the grossly inflated prices that these folk think these houses are worth. When there is more supply than demand - prices fall.

yellow I agree with everything you said except about our work ethic....

In lots of areas (including my own) the UK outperforms other countries with what look on the surface to be more committed work ethics because actually having some freedom and flexibility and time with your family turns out to give a boost to productivity that far outweighs the lost time sat at your desk (possibly asleep).

Also with unemployment on the rise we should be looking at working less hours (but more people working) rather than making the individuals that do have jobs work even longer while sacking others.

You're right I was musing on that from my time spent working in Hong Kong where in consultancy our working days were 15 to 18 hours a day, every day, and where I was stunned to discover that many of the Cantonese consultants I was working alongside were combining this working day with PHD or MBA studies!

Perhaps work ethic isn't the right word - but we do not have that tradition of long hours and most folk I know (myself included) would struggle with either / or an 18 hour day or a PHD. Why? I honestly think we are so comfortable we don't have the same cultural urge to strive - whereas in HK you know there is no social services so you have to fend for yourself, where some folk even live in cages in shared flats in Kowloon - there is a real incentive to work your ass off, and a really horrible fate if you don't.

Totally agree that long hours don't equate necessarily with productivity - the Cantonese consultants also regularly came into the office on Saturdays and Sundays - most just read the paper but it was important to be seen to be there.

But equally even if long hours don't necessarily equate with productivity my experience of working abroad doesn't give me much hope that the UK has anything unique to offer to the world that can't be done more cheaply somewhere else. We have no god given right to be a rich first world country - we just secured that through colonialism and the industrial revolution and our star seems to be descending now. Our time has passed? So why the feck would a terraced house be worth half a million pounds?????

For employers it is cheaper to have fewer staff working longer hours than more staff working less (admin costs, NI etc) so sadly in our joyous capitalist system I don't see that changing unfortunately. The government daren't legislate too heavily on employment for fear of driving multinational companies overseas so I don't see that changing.

Wasabi - I don't think renting is necessarily a bad thing either. I have a constant dialogue in my head about the pros and cons.

The pros are an awful lot to do with quality of life -I hope my children thank us for the quality of their childhood. The space that they have is something we'd never afford if we had a mortgage. Also our time - we work around the children so they see more of us than if we were paying a bigger mortgage. Again - the location - it's a really nice place to live. They get to hang out with their friends (and so do we) without too much trouble (commute/timings).

But on the flip side - we have nothing to show for our life. Well actually I typed that and thought durr we have 2 healthy children. We have nothing material to show for our life - yet.

Mmmm Welcome to my world of indecision!

From my point of view, my children that have left home, all rent. But they move around because of changing jobs and job locations.Buying with a mortgage would tie them down to one area and even country.
Not sure if that is of any help to the op at this moment in time?

I do love it when someone confirms my prejudices says exactly what I think, but so much better and with numbers. YellowWellies I'm not going to ask about your tin-foil-hat stuff, and may partially disagree re work ethic, but on much else you speak my branes.

Another huge item missing from discussion of the economy is that the size is not the only thing changing - it's the shape.

The employment market is becoming hour-glass shaped. The UK still has, and if it plays its cards right can continue to have, jobs at the top. And it still has jobs at the bottom, because you can't outsource shelf-stacking to India. But the jobs in the middle are going or have gone. Those steady office jobs and skilled manual jobs for Ordinary Jo have been outsourced.

And these are the jobs that paid for a house at 1990s rates. And that we're still telling the youngsters they can acquire by working hard at school and shelling out thousands for a mediocre degree. It's not true. We're preparing them for the world that existed when we were young - and it's gone.

I'm with you on the renting conundrum.

I love the feeling of having no debts.

Not so keen on not being able to make major decorational changes.

We've looked into buying our house but even with a 10% deposit, which we could raise, our repayments at 4.5% would be £550 pounds a month above our current rental payments. In short, we can't afford it even at these very low interest rates.

We could move out of London and find something cheaper and will probably do this in the long run but I don't think prices are going any higher so it doesn't feel like there's a rush.

I too have been thinking about this and agree with yellowwellies that the OP should cut her losses and rent. It goes against the grain a bit but the age of property as investment isnt necessarily 'over' but, well it aint healthy.

Yes we own and are relieved to be (just about) breaking even. However, take my nan for example. She is 89yo, has never owned a property, rented her flat from the council in the early 60's and has been happy as a pig in poo ever since. OK so she doesnt 'own' any bricks and mortar to speak of, but then again my mum and aunty never expected a cut of anything my nan owns.

Her council flat is in a really decent area, some might say a 'posh council flat'. Well it is, she lives round the corner from my other nan who owns her own home which is worth nigh on a quarter of a mil. They both just made different choices. But they both live in a really pleasant village with a low crime rate, and tons for families and the elderly to do, nice shops and the odd cafe, a library and most of all a community. The schools are excellent too.

When my dear nan passes away she will have lived the last 50 years a happy woman. We might get the odd ornament from her but tbh i dont want anything.

Honestly, if i had the choice between getting a rung on the ladder in a shit area or living in a rented house/flat in a lovely area then it is a no brainer imo

slightly ignoring the scary stuff on here, I do worry about my children ever being able to afford to buy a home. I'm afraid OP I'm one of those people you hate, I bought in '96 when I was 26 years old. I was flat broke for a decade afterwards because of it, but I'm fairly secure now with a 25% mortgage. We sold the flat I bought in 96 in 2009 and bought a house for exactly the same money (but further out of town, getting more for the same money iyswim) as dh knew things were going to get really rough over the next decade (he works in the city related to commercial property, goes to lots of seminars on economic future etc) and our plan is not to ever move if doing so means we have to borrow more money.

I'm sorry you're in this position op, to be honest I think we've been sleep walking in to a lifestyle that is simply unsustainable for 30 years. My family in south America boggle at the sort of things we spend our money on. And they often have four generations of the same family living in the same house. I have a feeling that's the sort of thing we're going to have to return to, multi generational living. Not such a terrible thing IMO.

Serialkipper that is so true about the hour glass shaped economy! The world has changed, I wish beyond anything I'd ignored the advice of my family to go to university (and I got a first from Oxford so it's not like I'm just dismissing a joke degree) and had just got on the ladder for peanuts. We need to be careful that we are not advising our kids on the basis of our past and what was good for us then. The next 20 years are going to be nothing like the past. We need to instil real skills, self reliance, a lack of debt, an avoidance of consumerist values, ditching our national attitude of entitlement and making a return to community.

Yellow wellies, I agree with so much you're saying... we've really got to get used to the idea that a) we're really insignificant now and spending our dwindling resoures trying to remain a game player is a waste of time and b) we have really got to get used to the idea that we cannot have it all. I personally got badly stung with debt back in the early 90s, I vowed then to never ever have more debt than I could cope with (ie my mortgage). We are bombarded with the idea that we can piss money up the wall on shit like Braziallian blow drys and teeth whitening (I mean seriously, WTAF?) that handbags cost over £1000 and that everyone needs to have 30 pairs of shoes. We've become duped by this consumerist dream.

Basically we need to become hippies again.

Evan Davies' recent series " Made in Britain" had me yelling at the telly, because he didn't seem to have grasped precisely the point that we don't have a god given right to be a rich nation.

He described China as a low-end, manufacturing centre and claimed the UK could stay ahead by doing the clever stuff.

Davies' face when one of the Chinese companies explained that, actually, they did their technological research and product design in China, was a picture. His first reaction was denial.

As you say, we're cruising on the tail end of the empire and the industrial revolution - and indeed North Sea Oil, the importance of which we carefully ignore - and kid ourselves we've been doing something clever.

We rent. And although it is annoying at times to not be able to make big changes etc, I am glad we do, because the alternative would be a smaller, more expensive house and a huge amount of dodgy debt.

We also don't have enough job security to buy. Not when we would almost certainly be stuck with an unsellable house for the foreseeable future.

We also live very frugally and save a lot, so that's my security for the future instead of home ownership.

It is shit though.

headfairy - totally agree re. multigenerational living, makes a lot of sense.

We rent. We are in our thirties. I hate it. This is not helped by the fact that I am a frustrated interior designer . The fucking magnolia walls that engulf me-ffs!!

We have made bad choices in the past regarding property and are paying for it now.

We are saving very very hard to buy a modest house in an area 20 miles away as it is (slightly) more affordable than where we currently rent. I was initially a bit meh at this but am now quite excited to start again somewhere that is not exactly that far from where we are now and means I can still keep in contact with friends here etc.

Yes, we will be paying a fairly large mortgage until we retire (unless we win the lottery) but the alternative is to pay the same amount monthly in rent. No thank you. Don't get me wrong, we have no luxuries whatsoever to achieve this dream and it can be a pretty miserable existence at times but I am thinking of the bigger picture. We are also putting off having another child for this.

We save for our DD now as do my parents, very small amounts each month but over the next 20 years (she is 2) I would like to think it will have amounted to a nice sum for her to be able to secure herself something as I do not want her to be in the position that we are in.

also is there any chance that if large numbers of people suddenly find themselves unable to pay back mortgages, (if the euro collapses or something) then is there a chance that banks will just write off debt? (as those owed by the Greek government have had too?

redshields apocalyptic tale did not say what happened to all the repossessed houses that were standing empty....

what would banks want with masses of empty houses? Surely writing off some of the debt is better than ending up with an unsellable house?

I think a few people have said on this thread that it doesn't help to compare to others - you really do have to just look at your own individual situation and logically work through how you could improve it.

I need to take this advice more often when I go to friends massive houses

I don't know. There is talk of debt forgiveness in Ireland which is in a real mess. As there is the realisation that with everyone maxed out on debt no one can afford to spend anything and the economy is dying. It would be massively unfair on those who didn't overstretch themselves and have been prudently saving.

I prefer another policy currently being enacted in Ireland - a retrospective property tax taxing property price appreciation over the past decade. The Daily Mail's legions would be howling here if we taxed that unearned wealth. I'd piss myself to be honest as it's about time those that benefitted paid for making the UK uncompetitive.

I mean come on prices rose 300% in the last decade yet the average wage rose just £6.5k - do remind me whilst workers are paying for the largesse of those sitting pretty on unearned thousands? But then we come to another crux of the problem, why is the basis of our taxation system work (which is something the poor must do), when actually work is generally good for society and our mental health - surely we ought to tax wealth and the best embodiment of that is land and multiple properties. But we won't do that as that would hit the rich.

Agree totally schmokeandpancake - especially WRT comparing with others. WE have some rich friends in a lush house (he's a banker)... But is infertile. The one thing money can't buy... Watching them go through rounds of IVF is heartbreaking.

This helps keep me grounded about the things that matter.

Head falling off nodding in agreement with YellowWellies

I agree with yellow wellies too.

In fact my head fell off and rolled down the road!