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ARGeezer:
I would bet that a large portion of this population would think that a 5% return, combined with genuine security insulated against currency risk would be an acceptable bargain.

That 5% return is before inflation. The "Affordable Rentals" which form the basis of the new form of "Equity" I advocate would be index-linked, and therefore the rate would be less, maybe 2 to 3% pa.

Moreover one of the most interesting features of the model is that it is superior to either of the two principal "Equity Release" mechanisms:

(a) "Reversion" - where someone pays an Equity Share in your house and gambles on how long you live - so if you are 85 you get more than if you are 65;

(b) "Roll Up" mortgages - where interest is not paid, but "rolls up" at a pretty high rate.

A home owner simply sells "Equity Shares" to investors and pays a "Capital Rental" in respect of them either in cash - thereby maintaining his level of Equity - or in more Equity Shares.

This mechanism runs down Equity more slowly than any other.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Thu Apr 10th, 2008 at 08:10:24 PM EST
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