Omega Owners Forum
Chat Area => General Discussion Area => Topic started by: Sir Tigger KC on 22 January 2014, 10:24:19
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Back in August when unemployment was 7.8% the Bank of England released it's 'forward guidance' that it wouldn't raise interest rates until unemployment was at 7% or below. At that time unemployment had hovered around the 8% mark for about four years and there seemed little prospects for a fall any time soon. ::) In this mornings news unemployment has fallen to 7.1% and if the economy continues to improve then the 7% line will be crossed fairly soon. :-\
So what will the Bank of England do?
There is a real danger that if they raise rates the recovery will be damaged as many businesses and families are relying on low rates to keep their heads above water and even a half percent rise would be a disaster. :( A raise in rates would be good for Britain's pensioners and investors but would also precipitate a rise in Sterling as with higher interest rates UK plc would be a more attractive place for investors. However a rise in Sterling would be bad for Britain's exporters which could further harm the recovery. :-\
My thought's are that as long as inflation stays at it's current rate of 2% the Bank will leave well alone and so they should! ;)
http://www.bbc.co.uk/news/business-25841570
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Didn't the current governor recently make a statement along the lines of "Now is the time to fix your mortgages"?
Ah, no, my mistake - just a 'senior banker': http://www.dailymail.co.uk/news/article-2540232/Fix-mortgages-avoid-pain-rising-rates-Senior-bankers-comments-fuel-fears-rates-set-rise.html
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Back in August when unemployment was 7.8% the Bank of England released it's 'forward guidance' that it wouldn't raise interest rates until unemployment was at 7% or below. At that time unemployment had hovered around the 8% mark for about four years and there seemed little prospects for a fall any time soon. ::) In this mornings news unemployment has fallen to 7.1% and if the economy continues to improve then the 7% line will be crossed fairly soon. :-\
So what will the Bank of England do?
There is a real danger that if they raise rates the recovery will be damaged as many businesses and families are relying on low rates to keep their heads above water and even a half percent rise would be a disaster. :( A raise in rates would be good for Britain's pensioners and investors but would also precipitate a rise in Sterling as with higher interest rates UK plc would be a more attractive place for investors. However a rise in Sterling would be bad for Britain's exporters which could further harm the recovery. :-\
My thought's are that as long as inflation stays at it's current rate of 2% the Bank will leave well alone and so they should! ;)
http://www.bbc.co.uk/news/business-25841570
Being a genius, I saw this coming. :y
I'm now locked into a five year low rate mortgage. This course of action already saves me about £1500 a year, and I'm guessing that when the Canadian inevitably puts up interest rates it will save me a whole lot more. :y
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Back in August when unemployment was 7.8% the Bank of England released it's 'forward guidance' that it wouldn't raise interest rates until unemployment was at 7% or below. At that time unemployment had hovered around the 8% mark for about four years and there seemed little prospects for a fall any time soon. ::) In this mornings news unemployment has fallen to 7.1% and if the economy continues to improve then the 7% line will be crossed fairly soon. :-\
So what will the Bank of England do?
There is a real danger that if they raise rates the recovery will be damaged as many businesses and families are relying on low rates to keep their heads above water and even a half percent rise would be a disaster. :( A raise in rates would be good for Britain's pensioners and investors but would also precipitate a rise in Sterling as with higher interest rates UK plc would be a more attractive place for investors. However a rise in Sterling would be bad for Britain's exporters which could further harm the recovery. :-\
My thought's are that as long as inflation stays at it's current rate of 2% the Bank will leave well alone and so they should! ;)
http://www.bbc.co.uk/news/business-25841570
Yes, I concur........ but savers will demand more bang for their buck and start pushing for an interest rate hike.
Sadly, The corrupt banking system in this country means that the banks never pass on the full benefit of any interest rate rise. :-\ :-\
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Suspiciously convenient drop in numbers.
"Biggest ever increase in quarterly employment." According to sky news.
Oh really. Who stands to gain from a low employment figure ?
Those with loads o' Money.
Or am I being cynical? :)
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My belief is they will keep rates low even though you have hit the 7%.
A bigger concern is the minimum wage increasing. Great for the low paid , attractive to migrant workers, creates more tax for the government and more money around to be spent BUt bad for the employer.
Personally higher UK interest rates would be good. The exchange rate would improve on £1 =1.22 euros. The Varche Millions£ would go further..............
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Suspiciously convenient drop in numbers.
"Biggest ever increase in quarterly employment." According to sky news.
Oh really. Who stands to gain from a low employment figure ?
Those with loads o' Money.
Or am I being cynical? :)
Yes, you are being cynical as the biggest and best change in an unemployed persons life is getting a job, especially for a young 21 year old, as an average £1150 monthly pay on the minimum wage in a full time job is much higher than the £250 on the dole!
Not to mention the feeling of self worth. I think we were all excited when we had our first full time job.
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The writing on the wall has been there for the 7% target with forward guidance and in the US they have already dropped this to a 6.5% unemployment target. I expect the BOE to do the same, exclaiming that it was only a guide and as you quite rightly said, after 5 years of 'temporary' according to the BOE above target inflation we are almost at the 2% target, although it is expected to pick up a bit later in the year. Much of this drop we have the US to thank for, as fracking is meeting more and more of their oil and gas requirements, so tight oil is less tight and prices are currently stable to dropping slightly. Never underestimate the effect the cost of energy has on the global economy.
They will do the same in the UK by changing the unemployment target as the important part from the planning point of view is getting businesses to invest in a self fulfilling recovery is sticking to the no interest rate rises before 2015 / 16. Don't forget 2015 is an election year and the Tory's will not risk affecting economic growth where this is their only major trump card. "Look we fixed the broken economy, the work to recover from the 2010 Labour mess is not finished, give us another term to do so".
An average economic cycle is 78 months, with the current one starting in 2009, so expect a bit of a slowdown at the end of 2014 and 2015 and this was only reflected yesterday in the IMF updated predictions for the UK economy, where growth is expected to be a bit lower next year.
Personally, I intensely dislike forward guidance as I think it makes a central bank a hostage to fortune. On the upside with growth in an economy, interest rates and other measure work well in controlling a boom, but on the downside the last 6 years have shown that central banks have virtually no tools in their locker and they are a bystander like the rest of us to what the economy does. One of the few tools they do have is the element of surprise and forward guidance removes this.
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Suspiciously convenient drop in numbers.
"Biggest ever increase in quarterly employment." According to sky news.
Oh really. Who stands to gain from a low employment figure ?
Those with loads o' Money.
Or am I being cynical? :)
Yes, you are being cynical as the biggest and best change in an unemployed persons life is getting a job, especially for a young 21 year old, as an average £1150 monthly pay on the minimum wage in a full time job is much higher than the £250 on the dole!
Not to mention the feeling of self worth. I think we were all excited when we had our first full time job.
>>>>>...a low employment figure<<<<<
(I can't highlight the relevant part of the post as the the software is bollardsed)
So you believe the figures?
The figures being one thing, and the actual level of employment/self worth/youth opportunities being QUITE another Rods.
Its interesting you choose to take the conversation forward that way though. ;)
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>:( Get ready for the "surprise " increase in unemployment when all the Xmas temp staff who were let go just after Xmas are added into the mix , lies , damned lies and statistics >:(
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The unemployment was just one figure being used for the decision to adjust interest rates. I think most economists think interest rates will raise back to more normal levels, possibly starting in the next 12-24m.
As most mortgages taken out in the last few years are in the 3.5-6.5% bracket, the banks have the ability to absorb some of the above base rate percentages.
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Back in August when unemployment was 7.8% the Bank of England released it's 'forward guidance' that it wouldn't raise interest rates until unemployment was at 7% or below. At that time unemployment had hovered around the 8% mark for about four years and there seemed little prospects for a fall any time soon. ::) In this mornings news unemployment has fallen to 7.1% and if the economy continues to improve then the 7% line will be crossed fairly soon. :-\
So what will the Bank of England do?
There is a real danger that if they raise rates the recovery will be damaged as many businesses and families are relying on low rates to keep their heads above water and even a half percent rise would be a disaster. :( A raise in rates would be good for Britain's pensioners and investors but would also precipitate a rise in Sterling as with higher interest rates UK plc would be a more attractive place for investors. However a rise in Sterling would be bad for Britain's exporters which could further harm the recovery. :-\
My thought's are that as long as inflation stays at it's current rate of 2% the Bank will leave well alone and so they should! ;)
http://www.bbc.co.uk/news/business-25841570
Being a genius, I saw this coming. :y
I'm now locked into a five year low rate mortgage. This course of action already saves me about £1500 a year, and I'm guessing that when the Canadian inevitably puts up interest rates it will save me a whole lot more. :y
I dont understand that :-\
Unless you were on a 'silly' rate when you changed.... :-\
Im on a standard variable rate.....when i checked with my mortgage comp about a year ago....they told me there was no cheaper rate to be on .... ie rates can only go up......so a fixed term mortgage will cost more.....or am i missing something :-\
Or you changed mortgage comps......and they gave you a 'new customer' deal :-\
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The unemployment was just one figure being used for the decision to adjust interest rates. I think most economists think interest rates will raise back to more normal levels, possibly starting in the next 12-24m.
As most mortgages taken out in the last few years are in the 3.5-6.5% bracket, the banks have the ability to absorb some of the above base rate percentages.
Never in the history of finance, or at least since I've been looking ;D, have mortgage rate reductions been passed on to the customer to the letter. I doubt very much banks will baulk at the opportunity to milk its customers further, within the confines of base rates and almost fixed competition of course.
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Back in August when unemployment was 7.8% the Bank of England released it's 'forward guidance' that it wouldn't raise interest rates until unemployment was at 7% or below. At that time unemployment had hovered around the 8% mark for about four years and there seemed little prospects for a fall any time soon. ::) In this mornings news unemployment has fallen to 7.1% and if the economy continues to improve then the 7% line will be crossed fairly soon. :-\
So what will the Bank of England do?
There is a real danger that if they raise rates the recovery will be damaged as many businesses and families are relying on low rates to keep their heads above water and even a half percent rise would be a disaster. :( A raise in rates would be good for Britain's pensioners and investors but would also precipitate a rise in Sterling as with higher interest rates UK plc would be a more attractive place for investors. However a rise in Sterling would be bad for Britain's exporters which could further harm the recovery. :-\
My thought's are that as long as inflation stays at it's current rate of 2% the Bank will leave well alone and so they should! ;)
http://www.bbc.co.uk/news/business-25841570
Being a genius, I saw this coming. :y
I'm now locked into a five year low rate mortgage. This course of action already saves me about £1500 a year, and I'm guessing that when the Canadian inevitably puts up interest rates it will save me a whole lot more. :y
I dont understand that :-\
Unless you were on a 'silly' rate when you changed.... :-\
Im on a standard variable rate.....when i checked with my mortgage comp about a year ago....they told me there was no cheaper rate to be on .... ie rates can only go up......so a fixed term mortgage will cost more.....or am i missing something :-\
I was. :'(
We all know that the base rate has been set at 0.5% for about the last four or five years.
However, as banks are basically run by criminals I've been paying a ridiculous 4.49%. That is a healthy mark up for the banks, but an unhealthy mortgage payment for me each month.
When Carney promised to keep interest rates low, so long as unemployment remained above 7%, the banks relented slightly and started to offer better mortgage deals........probably because they thought they were on safe ground for at least the next five years.
So I took a fixed deal of 3.49% for the next five years. :)
With the news today (7.1% unemployment) and the distinct possibility of interest rate hikes, I doubt that beneficial fixed rate deals will be available for very long. :-\
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Suspiciously convenient drop in numbers.
"Biggest ever increase in quarterly employment." According to sky news.
Oh really. Who stands to gain from a low employment figure ?
Those with loads o' Money.
Or am I being cynical? :)
Yes, you are being cynical as the biggest and best change in an unemployed persons life is getting a job, especially for a young 21 year old, as an average £1150 monthly pay on the minimum wage in a full time job is much higher than the £250 on the dole!
Not to mention the feeling of self worth. I think we were all excited when we had our first full time job.
>>>>>...a low employment figure<<<<<
(I can't highlight the relevant part of the post as the the software is bollardsed)
So you believe the figures?
The figures being one thing, and the actual level of employment/self worth/youth opportunities being QUITE another Rods.
Its interesting you choose to take the conversation forward that way though. ;)
Overall employment figures are a much better guide as they are more difficult to manipulate by governments than unemployment as there are: Those that have given up and dropped out of the marketplace and also under employed where people want a full time job but all they can get is part time, zero contract or coerced by the DOE to become self-employed, temporary employment, unpaid work experience, interns etc, etc... And this is all before you get on to other fiddle factors like seasonal adjustment.
In the US where unemployment is around 7.5% once you include people that have dropped by giving up looking, underemployment etc, it is estimated at 13-15%.
Unfortunately, governments globally are fiddling more with all statistics for political reasons and the data is becoming more meaningless. Inflation is in IMO being extensively gerry mandered. CPI does not include house and rents and CPIH includes houses but only rents. RPI is consistently higher than CPI and IMO probably more accurately expresses real inflation and governments use it for increasing their fees, but use CPI when they have to increase payments! :o
Lies, damned lies and statistics again and governments are much better at it than most.
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Be nice if interest rates went up ... I might actually get some return on my savings then .... as an old sod many of us "saved" for our retirement..... and at the moment the returns are pitiful..... :(
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This all seems a bit deja vue :-\
Wasn't there a similar 'debate' three months ago :-\
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Be nice if interest rates went up ... I might actually get some return on my savings then .... as an old sod many of us "saved" for our retirement..... and at the moment the returns are pitiful..... :(
:y :y :y
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This all seems a bit deja vue :-\
Wasn't there a similar 'debate' three months ago :-\
Probably, but no harm in chewing it over again. ::) ;)
Where do you stand Al? ???
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Vertically as a rule :y
Fewer unemployed = more part time and agency staff, not more money in the economy. As basic wages rise hours will fall with reduced or removed benefits such as holiday pay, as part time and temporary staff are entitled to less. So unemployment will continue to fall as more and more fulltime positions become parttime :-\
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I suspect that the under employment figures paint a very different picture :-\
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However, as banks are basically run by criminals I've been paying a ridiculous 4.49%.
Think yourself lucky .. mine is a healthy 6.19%. If I could switch (not sure there's enough equity in the house to cancel out the early redemption penalty) I could save as much as £300 a month!
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However, as banks are basically run by criminals I've been paying a ridiculous 4.49%.
Think yourself lucky .. mine is a healthy 6.19%. If I could switch (not sure there's enough equity in the house to cancel out the early redemption penalty) I could save as much as £300 a month!
6.19% with a base rate of just 0.5%...... :o :o :o :o :o
Strewth, Aaron. The banks must be making a 'mint' out of you and laughing all the way to the ahem.... ::) ::) ::) 'bank'. ;D ;D
Seriously though, I'd take the time to look into this daylight robbery. :-\ :-\
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However, as banks are basically run by criminals I've been paying a ridiculous 4.49%.
Think yourself lucky .. mine is a healthy 6.19%. If I could switch (not sure there's enough equity in the house to cancel out the early redemption penalty) I could save as much as £300 a month[/i]!
£3600 per year is a lot of petrol.......holidays.......call girls, Aaron.
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Unfortunately when I took the mortgage out (early 2009) that was the best interest rate I could get with my paltry 15% deposit .. it was hard to get good rates back then; a colleague of mine put down a 30% deposit on his and still only secured 4.19%.
I really must get mine valued - if it's increased in value a little bit then that would offset the early repayment penalty (some £11,000 right now) - in the long run it probably won't really save money on the mortgage as the repayment penalty is so large, but £300 a month would make things a whole lot easier money wise!
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Unfortunately when I took the mortgage out (early 2009) that was the best interest rate I could get with my paltry 15% deposit .. it was hard to get good rates back then; a colleague of mine put down a 30% deposit on his and still only secured 4.19%.
I really must get mine valued - if it's increased in value a little bit then that would offset the early repayment penalty (some £11,000 right now) - in the long run it probably won't really save money on the mortgage as the repayment penalty is so large, but £300 a month would make things a whole lot easier money wise!
In that's the case, I'm quite pleased with a rate of 3.49% until October 2018. Especially as I originally took out a self-cert mortgage (Liar loan ::) ::)) which was way above the SVR of the time.
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I'd be over the moon with 3.49% at this point in time ;D
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I'd be over the moon with 3.49% at this point in time ;D
It's fortunate that you possess almost unlimited wealth, Aaron. :y
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It's fortunate that you possess almost unlimited wealth, Aaron. :y
Ah, if only!
So I was looking at mortgages last night and, if I'm roughly right on the value of the house, it looks like the best options would be:
1) 2.19% for two years (then 5.99%), saving ~£450/mo
2) 3.34% for five years (then 4.49%), saving ~£330/mo
In overall terms the second saves considerably more, but that headline £450 a month would be very nice.
The question is.. what are interest rates going to do in the next ~24 months. Does anyone have a crystal ball?
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It's fortunate that you possess almost unlimited wealth, Aaron. :y
Ah, if only!
So I was looking at mortgages last night and, if I'm roughly right on the value of the house, it looks like the best options would be:
1) 2.19% for two years (then 5.99%), saving ~£450/mo
2) 3.34% for five years (then 4.49%), saving ~£330/mo
In overall terms the second saves considerably more, but that headline £450 a month would be very nice.
The question is.. what are interest rates going to do in the next ~24 months. Does anyone have a crystal ball?
That's more like it. :y
6.19% is just taking the piss. :-\
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It's fortunate that you possess almost unlimited wealth, Aaron. :y
Ah, if only!
So I was looking at mortgages last night and, if I'm roughly right on the value of the house, it looks like the best options would be:
1) 2.19% for two years (then 5.99%), saving ~£450/mo
2) 3.34% for five years (then 4.49%), saving ~£330/mo
In overall terms the second saves considerably more, but that headline £450 a month would be very nice.
The question is.. what are interest rates going to do in the next ~24 months. Does anyone have a crystal ball?
A crystal ball is not necessary. They are almost certain to rise.
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It's fortunate that you possess almost unlimited wealth, Aaron. :y
Ah, if only!
So I was looking at mortgages last night and, if I'm roughly right on the value of the house, it looks like the best options would be:
1) 2.19% for two years (then 5.99%), saving ~£450/mo
2) 3.34% for five years (then 4.49%), saving ~£330/mo
In overall terms the second saves considerably more, but that headline £450 a month would be very nice.
The question is.. what are interest rates going to do in the next ~24 months. Does anyone have a crystal ball?
A crystal ball is not necessary. They are almost certain to rise.
If the end of 2014 and 2015 are the end of an average length economic cycle then they will probably stay where they are. Remember there is an election in May 2015 and the government will do everything possible to feed the current boom. When it comes to elections Clinton told us what counts "Its the economy stupid". After May 2015 who knows.
Had to laugh at Cameron yesterday saying that the BOE is completely independent of the Government. On that basis, so is the UK, the EU has no say or influence. :o :o :o :o
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A crystal ball is not necessary. They are almost certain to rise.
True - the only real question is how soon and how high..
I just booked a 'free valuation' with a local agent to get an idea of the value of the house (knowing that mortgage valuers almost always go lower, at least it will give me an idea) - I'm sure they'll spend most of their time on Monday trying to persuade me to market my house with them, of course..
I'm crossing my fingers the number is high enough to put me in the <75% LTV bracket (figures above were from the <80% LTV bracket) as there are some really attractive rates there. Saving £400/mo over five years would be nice..
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Valuers are deliberately under valuing in an attempt to keep property prices low. By as much as 40k on property around the 300k mark in this area anyway.
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Carney said the other day that despite unemployment falling there is no rush to increase interest rates. :y
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Agents however will simply tell you what you want to hear.
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Ah mortgage, 9 years left and counting, happy days
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Ah mortgage, 9 years left and counting, happy days
*sticks fingers in ears*
La la la la la la la I can't hear you!
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Valuers are deliberately under valuing in an attempt to keep property prices low. By as much as 40k on property around the 300k mark in this area anyway.
That kind of under valuation would, I reckon, make this place worth less than I paid for it just after the crash.. which would be unfortunate!
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It's under what was considered market value by 20k. Plus the market had risen 20k locally in short order.
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Tracker +0.99 over base rate
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Tracker +0.99 over base rate
I think mine's lower than that, for the life of the loan, too. :y
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I was chatting to a friend of mine at work and with his details he was getting products in that kind of region, too - 1.49% was the one I remember.. but for that you needed an LTV of <50%, dreamland territory for us mere mortals :'(
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Mortgage finished :D. Mine, all bl..dy mine. :-*
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Mortgage finished :D. Mine, all bl..dy mine. :-*
It's at times like these that you're glad you haven't rented for the last 25 years. :y