House prices 'see first double-digit fall'

trulysaintly

StevieJ wrote: »

I agree that the press as always are making the problem worse, but are you saying that if all the FTB's (with deposits and good credit history) came back to the market the banks could produce the funds?
For what it is worth I think this house crash will be faily short lived because I believe it was caused by a dramatic shock to the system (credit crunch) which in turn is causing fairly dramatic falls in the housing market over a short period caused by:
(a) Lack of finance for cash strapped FTB's
(b) Market driven by distressed sales ( i.e. low transactions and housholders not bothering to move if they do have to).
In addition I think that the market was cut short of hitting a peak by the CC which should in turn limit the downside. These quotes of 20/30% current annual drops based on the last three months are a little strange as I would expect the annual drops to slow after this month as annual comparisons will be based on falling prices not increasing ones, with August being the peak.
I can also forsee a reduction in inflation in the next 12 months as contracting commodity prices have a negative inpact on inflation thus allowing the BOE to drop interest rates. This combined with the lack of houses being built could provide some support for house prices.

Touch paper lit, I will just stand back now.

Hope this doesn't surprise you Stevie, but I agree with you.

As far as FTB's go, lenders will increase the 95% options as soon as the demand is there - one of the reasons they dipped out was because of the lack of money being traded between the banks (which has improved in the last month) and lack of interest from the FTB's.

Throw in a Stamp Duty suspension and you have a market in recovery. Sounds simple, and in fact it is. Just takes someone with balls the size of grapefruits to make it happen.

Just don't think Mr Eyebrows has them.

How do I know that lenders will come back at 95%? 10 years experience with two high street lenders...they will come back in, they just need a reason to.

sympatex

The information printed can be twisted all kinds of ways TS. You have a positive outlook, that's great, fingers crossed for your job it all turns around.

Most positive news is posted by vested interests who are losing money by the downturn in housing and want to lure more people into serious debt. (anyone with a mortgage or intending to get a mortgage is a vested interest one way or another!) low mortgage rates will get FTB's and the market moving again but the private banks not the BOE decide mortgage rates. they will want to recoup some cash before they venture into low mortgage rates again. how long does it take to recoup $500bn? (note whatever the CC has cost british banks althogh global markets might effect our mortgage rates)

trulysaintly

Paul_N wrote: »

TrulySaintly, I'm simply picking flaws in your arguments because they don't hold up to scrutiny.

On Varley, he says the worst of the credit crunch is behind us (although that is at odds with the majority opinion with his peers in the banking sector), but he does not say the credit crunch has ended.

But I'm in agreement with you, the last 5 years of house price rises are looking at being reversed.

The credit crunch is in the early stages of ending - banks are lending to each other in the last 3-4 weeks, which is why lenders like Halifax, Nationwide, Abbey, Alliance & Leicester and C&G have been changing their rates downwards during that time.

The competition is coming back to the mortgage market - that is what was lost during the early stages of the credit crunch.

The lenders that went to the wall were all Sub Prime, and funded by American Banks. Totally different market to those mentioned above.

trulysaintly

sympatex wrote: »

The information printed can be twisted all kinds of ways TS. You have a positive outlook, that's great, fingers crossed for your job it all turns around.

Most positive news is posted by vested interests who are losing money by the downturn in housing and want to lure more people into serious debt. (anyone with a mortgage or intending to get a mortgage is a vested interest one way or another!) low mortgage rates will get FTB's and the market moving again but the private banks not the BOE decide mortgage rates. they will want to recoup some cash before they venture into low mortgage rates again. how long does it take to recoup $500bn? (note whatever the CC has cost british banks althogh global markets might effect our mortgage rates)

Thanks, if we all walked around all 'doom and gloom' we'd be heading towards a recession.


Oops... I see what I did there...

Paul_N_4

trulysaintly wrote: »

Throw in a Stamp Duty suspension and you have a market in recovery.

Not so sure about this. The Torys tried it in the 90s and it didn't work. A suspension is nowhere near as appealing as a complete dropping of SD for FTBers.

Besides, FTBers can't currently afford to buy because they need to raise at least 5-10% deposit, plus fees, which amounts to a good £10,000+ at current prices. Correct me if I'm wrong but aren't mortgage sizes pretty restricted if you only have 5% deposit as well? Not to mention higher rates. 10% seems to get you a better deal but still far off pre-cc deals. Generally a sizable deposit is needed (10%+) to get a sizable mortgage. And a sizable mortgage is what is needed if you want to buy at today's prices.

And will a suspension of £1500-£2000 really whet their appetite? Or will they just carry on waiting considering house prices are falling more than that amount each month at the moment?

I have a feeling we will find out later this year.

Generali

trulysaintly wrote: »

The credit crunch is in the early stages of ending - banks are lending to each other in the last 3-4 weeks, which is why lenders like Halifax, Nationwide, Abbey, Alliance & Leicester and C&G have been changing their rates downwards during that time.

The competition is coming back to the mortgage market - that is what was lost during the early stages of the credit crunch.

The lenders that went to the wall were all Sub Prime, and funded by American Banks. Totally different market to those mentioned above.

The first stage of the credit crunch is ending IMO. The second stage is where banks start taking a hit from people that rely on borrowing to keep going being unable to repay their loans. That includes a lot of sound businesses, not just mad people that buy truffle infused baked beans on their Amex.

Paul_N_4

trulysaintly wrote: »

The credit crunch is in the early stages of ending - banks are lending to each other in the last 3-4 weeks, which is why lenders like Halifax, Nationwide, Abbey, Alliance & Leicester and C&G have been changing their rates downwards during that time.

The competition is coming back to the mortgage market - that is what was lost during the early stages of the credit crunch.

The lenders that went to the wall were all Sub Prime, and funded by American Banks. Totally different market to those mentioned above.

I'm sure mortgage rates will continue to fall as swap rates fall. But what is lacking now as opposed to pre-cc is the volume of money the banks have to lend. The MBS market is all but shut down, and without that, the banks can't raise the amount of money they were raising pre-cc.

With the banks having less money than demand wants, they're naturally restricting what little funds they do have to only the most credit worthy. I don't think this will change anytime soon. For it to change, the banks need to find another money tree like the securities market.

Here's a bit on this from Crosby's report:
http://www.timesonline.co.uk/tol/money/property_and_mortgages/article4426026.ece

More worryingly, Sir James’s report revealed that banks will have to find about £40 billion every year for the next three years just to refinance their existing mortgage commitments, even before they start thinking about underwriting new ones.

So its fine talking about stamp duty holidays, mortgage rate cuts, etc restimulating the housing market, but first off, we need to ask where's the money coming from?

BobProperty

Generali wrote: »

I'm posting from 'work'. It keeps me direct! Sorry if I stole your thunder.

The best one is those Kond-whatsit cycles. 50 year super cycles.

Kondratieff - The late Bob Beckman was into them IIRC.

dopester

Generali wrote: »

It's just the desire of the rational person to see order in chaos.

There is hidden order in chaos.

It is just very difficult to put the complex chains of events together. Near impossible for the human mind, but the narrowing realm of the random is likely to be ever more brought in to focus by the computers of tomorrow. Cause and effect operate in cycles as well as in a straight line.

Developments now assumed as random and part of the chaos, may actually be deterministic when analysed in higher dimensions.

Economic models that assume continuity are inadequate, because they mask long-term change, but also because they mask many phase transitions, including discontinuities in the way that people calculate and respond to incentives.

Generali

dopester wrote: »

There is hidden order in chaos.

It is just very difficult to put the complex chains of events together. Near impossible for the human mind, but the narrowing realm of the random is likely to be ever more brought in to focus by the computers of tomorrow. Cause and effect operate in cycles as well as in a straight line.

Economic models that assume continuity are inadequate, because they mask long-term change, but also because they mask many phase transitions, including discontinuities in the way that people calculate and respond to incentives.

TBH that sort of thing applied to markets has more than a whiff of hubris about it.

Remember LTCM? Their bets were shown to be right in the end. The only trouble is, they went bust before they were right.