House Price Crash

lypsey wrote:

I understand that Martin was on BBC1 this morning saying something like houses were overvalued and going down

He mentioned websites like housepricecrash.co.uk

I didn't see it but can someone post some more info please

I think that a house price crash is now extremely likely. Particularly seeing what is happening in some other countries. I'm pleased that Martin has warned people of this possibility. I meet too many people in daily life who seem to think that house prices can only ever go up. So they hurry to buy no matter how far they're stretched because they believe they'll get even more priced out otherwise. Or they buy massively overpriced BTL flats expecting that it's a one-way bet that the values will rise. Too many newspapers and commentators seem to want to sweep the potential downside under the carpet, and I personally believe that many of them are conciously lying. All credit to Martin for warning people, I hope some people at least take notice.

What he actually said is that there will hopefully be some stability in house prices in the immediate future, but stated that he is in no position to begin to predict what will happen in reality. He also said that they could fall.

I personally agree with everything he said this morning about borrowing limits and not overstretching to obtain a mortgage.

I have been recommending for a long time now that people should only borrow around 90% of what they can comfortably afford, to allow for future rate increases above the rate of wage rises etc.

I find it shocking that people are not only still asking for mortgages in excess of 5 x their salary, but more disturbingly they are being advised to do it. More and more commonly now I am actually turning clients away who are looking to borrow vast sums of money against they salaries or 'self certified' income, as I do not want to put my name to such irresponsible advice.

In an environment of rising interest rates, rising inflation and a slowing housing market it is asking for trouble. I certainly wouldnt want to be the lender or the adviser responsible for such a recommendation when the inevitable looming complaints begin to come in.

The trouble is that the borrower themselves will never take responsibility f they over-commit. It will always be the fault of the bank or broker etc.

Whilst the borrower must accept that they have to take responsibility for the amount they have asked for, if they have a written recommendation from a lender or broker actually advising them to take a mortgage of, for example, 5 x income which later proves unaffordable then the broker has no defense, as they should have made the client aware of the possibility of future affordability.

In today's claim culture it will be easy for the borrower to calim mis-sale unless the broker or lender concerned can prove affordability currently, and at the end of any incentive period of the mortgage.

For god's sake people, get real and be realistic when you are asking for advice on what you can borrow. Don't be tempted to go with the lender/broker who dangles the carrot of the most mortgage in front of you.

Andy

http://news.bbc.co.uk/1/hi/uk/5340878.stm

The above was on Breakfast News today - apparently Citizen's Advice are seeing increasing numbers of young people overcommitted on their mortgages.

I think a few birds are coming home to roost...

It'll happen sooner of later (the crash that is) and probably sooner. Let's face facts, If as yesterdays Mail tells us, houseprices have doubled in the last four years, a 40% correction isn't really very much?

Well done Martin for speaking out. :beer: