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    (Original post by Lime-man)
    As edited, I could get a 2.5% interest rate redeemable in 2065, and given that the revenue on the housing scheme is 2.5% the government breaks even on it.
    I think it's compound interest, although I'm not certain. There is also the matter of how the revenues change in real terms.

    EDIT: readings the article again, it isn't compound

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    (Original post by Jammy Duel)
    I think it's compound interest, although I'm not certain. There is also the matter of how the revenues change in real terms.

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    I'm just yet to see how the plan couldn't be financed from the revenues, with the savings as a cherry on top.
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    (Original post by Lime-man)
    I'm just yet to see how the plan couldn't be financed from the revenues, with the savings as a cherry on top.
    You would need to issue the gilts at a rate lower than the returns, however the going rates are higher

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    (Original post by Jammy Duel)
    You would need to issue the gilts at a rate lower than the returns, however the going rates are higher

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    But if we offer 30 year gilts at 2.5% which is better than a 50 year GILT at 2.5% as I've seen on the DMO, then we break even and have the savings as a cherry on top, then there's the private sector having to compete with these 500k new homes with rents of £400PCM which improves economic activity in the housing market and also there's the fact that we improve the UKs housing situation.
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    (Original post by Lime-man)
    But if we offer 30 year gilts at 2.5% which is better than a 50 year GILT at 2.5% as I've seen on the DMO, then we break even and have the savings as a cherry on top, then there's the private sector having to compete with these 500k new homes with rents of £400PCM which improves economic activity in the housing market and also there's the fact that we improve the UKs housing situation.
    You keep talking about savings, what savings, and on such a long gilt I suspect you're not going to get so much, the value of gilts is ultimately determined by the base rate and what is expected to happen, there was a reason that gilt coupons crashed with the financial crisis and that's because the BoE rate crashed.

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    (Original post by Jammy Duel)
    You keep talking about savings, what savings, and on such a long gilt I suspect you're not going to get so much, the value of gilts is ultimately determined by the base rate and what is expected to happen, there was a reason that gilt coupons crashed with the financial crisis and that's because the BoE rate crashed.

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    However the BOE rate at the moment is at 0.5% which isn't too bad at all.

    Savings to housing benefit which is a massive chunk of the Welfare budget.

    Current inflation is 0.3% which also isn't too bad at all.

    Short term gilts are at 0.5% to 1.5% and long term gilts are still under 3% so I don't know where the 3.5% figure you stated earlier came from.

    I may not know much on the subject but as the discussion continues I'm becoming less and less convinced that you're being sincere.
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    (Original post by Lime-man)
    However the BOE rate at the moment is at 0.5% which isn't too bad at all.

    Savings to housing benefit which is a massive chunk of the Welfare budget.

    Current inflation is 0.3% which also isn't too bad at all.

    Short term gilts are at 0.5% to 1.5% and long term gilts are still under 3% so I don't know where the 3.5% figure you stated earlier came from.

    I may not know much on the subject but as the discussion continues I'm becoming less and less convinced that you're being sincere.
    3 1/2 % 2045, third page

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    (Original post by Lime-man)
    However the BOE rate at the moment is at 0.5% which isn't too bad at all.

    Savings to housing benefit which is a massive chunk of the Welfare budget.

    Current inflation is 0.3% which also isn't too bad at all.

    Short term gilts are at 0.5% to 1.5% and long term gilts are still under 3% so I don't know where the 3.5% figure you stated earlier came from.

    I may not know much on the subject but as the discussion continues I'm becoming less and less convinced that you're being sincere.
    Also need to ask whether they're index linked or not, if index linked the percentage is the amount above inflation, if not that is all the interest

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    (Original post by Jammy Duel)
    3 1/2 % 2045, third page

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    But even at 3.5pc that means interest repayments of £571m, and given that the housing plans would save about £300m in housing benefit, that's over 50% of the funding needed.
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    (Original post by Jammy Duel)
    Also need to ask whether they're index linked or not, if index linked the percentage is the amount above inflation, if not that is all the interest

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    It's conventional
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    (Original post by Lime-man)
    But even at 3.5pc that means interest repayments of £571m, and given that the housing plans would save about £300m in housing benefit, that's over 50% of the funding needed.
    3.5% means that each year's gikt issue pays £700m interest, or more if index linked, where does the 300m figure come from?

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    (Original post by Jammy Duel)
    3.5% means that each year's gikt issue pays £700m interest, or more if index linked, where does the 300m figure come from?

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    The difference in the average benefit payout to a private tenant and a social tenant inEngland, which is about £950 per year.

    -edit- the GILT you're referring to is a conventional one, which is just one out of several. I maintain that the plan could be financed by a 50 year 2.5% conventional GILT
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    (Original post by Lime-man)
    The difference in the average benefit payout to a private tenant and a social tenant inEngland, which is about £950 per year.

    -edit- the GILT you're referring to is a conventional one, which is just one out of several. I maintain that the plan could be financed by a 50 year 2.5% conventional GILT
    so how did you get £300m from £950 each?

    And I'm still skeptical on 2.5% 50 year given that I doubt many potential investors expect the BoE rate to stay low enough for long enough for that to be a wise investment, even if longer GILTS are less related to the BoE rate than shorter ones.
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    PetrosAC and Saracen's Fez you can fund the housing plan with a 50 year 2.5% GILT, which means that it breaks even with the revenues and involves a saving of around £300m in housing benefit.
    Attached Images
  1. File Type: png GILT 50 year.png (47.9 KB, 9 views)
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    (Original post by Jammy Duel)
    so how did you get £300m from £950 each?

    And I'm still skeptical on 2.5% 50 year given that I doubt many potential investors expect the BoE rate to stay low enough for long enough for that to be a wise investment, even if longer GILTS are less related to the BoE rate than shorter ones.
    The difference is £936, and the costing is based on an average over 5 years of the scheme

    I attached it to the post above
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    (Original post by Lime-man)
    The difference is £936, and the costing is based on an average over 5 years of the scheme

    I attached it to the post above
    As I recall each year you wanted 100,000 homes built, last I checked 100,000*936 is not £300m, it's only £93.6m

    You're also still busy looking at the wrong data
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    (Original post by Jammy Duel)
    As I recall each year you wanted 100,000 homes built, last I checked 100,000*936 is not £300m, it's only £93.6m

    You're also still busy looking at the wrong data
    (93.6 + 187.2 + 280.8 + 374.4 + 468) / 5 = 280.74
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    (Original post by Lime-man)
    (93.6 + 187.2 + 280.8 + 374.4 + 468) / 5 = 280.74
    (700m+1400m+2100m+2800m+3500m)/5=2100m

    You're doing dodgy/misleading/unnecessary accounting again
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    (Original post by Jammy Duel)
    (700m+1400m+2100m+2800m+3500m)/5=2100m

    You're doing dodgy/misleading/unnecessary accounting again
    Dodgy/misleading is unfair. Over the course of the 5 year house building plan, the average saving on housing benefit would be £280.8m, that's what I was referring to.
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    (Original post by Lime-man)
    Dodgy/misleading is unfair. Over the course of the 5 year house building plan, the average saving on housing benefit would be £280.8m, that's what I was referring to.
    The average revenues would be £1.5bn and the average interest £2.1bn
 
 
 
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