Tomorrow is only Wednesday, but for me, it is going to be the start of the weekend, as Thursday is a public holiday and I have used some of my copious amounts of flexi hours to take Friday off - so at 4pm-ish (I might kick in early) tomorrow, I will have a 4-day weekend.
Most of what I have on my to-do list is continuing on with the renovation, mostly filling and sanding work will need to be done. But, hopefully I will find some time to do something else as well, perhaps a barbeque since the weather is meant to be okay.
I am not sure if I will need nipple covers, but as they say, be prepared.
One of my colleagues today was talking about his house hunting and the potential to get a loan from a bank. For those who remember from last year when my wife and I bought this place, getting a loan was very easy for us, as long as we were buying new. Getting a loan on a place that needed renovation was very difficult. The reason was that they can only loan a maximum of 85% on the value of the property, even if it requires renovation. This means that the renovation costs have to come out of pocket and there aren't many people who have that kind of money in cash. We did manage to eventually wrangle a loan, but we are on a deadline in order to increase the value of the property enough to be able to cover it.
The deadline is looming, but at least if what our colleague says is true, the value of our property should be going up over the next few years. The reason is that it is supposedly now possible to get a loan from a bank in Sweden, instead of a Finnish bank and there, they can offer loans of up to 105 years. Yes, a one hundred and five year loan on a house. What this has meant is that housing prices have increased rapidly over the years in Sweden to the point where they had to cap the terms to 105 years as it was apparently possible to have longer terms.
The longer terms obviously mean that in the long-run, the loan is far more expensive, but it also means that people can take larger loans because their monthly costs are lower. These costs obviously creep up as the houses get larger, fancier and there is more demand for the better ones, but there are other affects too. As people have "more" disposable income, they spend more as consumers and all prices trend upward quickly, until a new equilibrium is reached. For the people who bought early and own their homes, they ended up in a very good position, in the housing market, but everything also got more expensive.
So, if true and my colleague is able to buy his home on a 100 year loan, meaning he will not pay it off himself and the mortgage will pass to his kids, housing prices are going to increase very fast. A lot of people over the last few years have been unable to get into houses because of the rules around renovation loans, so have gone into new apartments that do not require renovation, but are very expensive and have maintenance costs as well as rent on the land. There are thousands of these being built, while for years and in some nice suburbs, old houses are rotting away unsold, no matter what price they ask.
With Corona forcing people home and making them rethink their environment, many are wishing for homes for the space to have an office, as pretty much no apartments cater for an office space in Finland. If they can now get low monthly repayments on getting into a house instead, I predict many are going to leap at the chance, even if they know that they will pay far more over the 100 years. not only that, because the monthly payments are low, they will also be more confident in being able to deal with interest rate rises, when they happen.
this could see the value of houses increase significantly and outstrip the increase to apartments, however I think apartments will also increase even further, as people shift form renting to owning - well, perhaps their grandchildren will own it. 100 years is a very long time and if you imagine that a 30 year person takes the loan, at the average mortality rate, they will still have 50 years left to pay it. If they make it to 80, their kids are likely in their 40s or 50s and will still have 50 years left on the parent's loan to pay, if they want to keep the family home. So, going on averages, the last 10 years of the loan will be paid by grand children in their 50s.
Anything to kick the can down the road.
100 year loans are a great way to boost the economy for several reasons, especially for the investors who own many properties and can sell into the boom to desperate house-hunters flush with fresh debts and low monthly payments. It keeps the economy alive artificially, instead of letting it crash, by passing the cost of the created bubble to future generations and, those future generations aren't going to be inheriting a house, they are going to be inheriting a debt on a house that likely needs a lot of renovation work and there is still another 50 years on the loan to pay.
The desperation of those who control the current economy to extract as much value as fast as possible our before the music stops is incredible, yet, no one seems to care. The funny thing was that the colleague started talking about this because we were talking about DeFi opportunities and he was saying how sketchy it all sounds.
People fear the loss of investment now, but don't mind being bled dry by a bank and government for a lifetime. They do not want to lose any money, but don't mind buying a TV on credit. Bit by bit and in the quest for security, the average person is going to lose their shirt and will not have enough incoming capital to cover their nipples, let alone their debts.
It is going to get cold out.
Are you covered?
Taraz
[ Gen1: Hive ]