Should we pull out of house buy

fatpig_2

Chris , you're talking absolute rollox now. If banks could control prices then prices would never fall. The banks would just make them go up and up and make increasing profits on the larger and larger mortgages required.

Chris2685

Well of course I'm not saying they can stop them falling completely, but they do have a damn big influence.

IF they decided to stick interest rates at 15% and ONLY loaned to people with 50% deposits, house prices would drop.

IF they decide to lend to people with 5-10% deposits and 5x LTV, then they keep the prices higher...

IF they decide to lend 125% mortgages and 10x LTV, they keep them even higher still.

I'm not saying they would do any of those things, just saying how they have an influence depending on what they lend!

ad44downey

They wouldn't do any of those things in the current market for one reason and one reason only, they'd lose even more money than they have thus far..

They have a small influence on house prices but ultimately house prices fall because they're unaffordable in terms of people's salaries.

geoffky

the problem is they do not have the money now or for the foreseeable future to do any of this...and what about valuers?

ad9898_3

flea72 wrote: »

on a basic level, and perhaps im being a bit mad, but if everyone waits for the market to totally bottom out, and then decide its the right time to buy, wont that then push prices up quickly again, due to there being too many buyers and not enough houses, and well be back to square one in tens years time?

Flea

No this probably won't happen, banks are tighter than a fishes ar**hole and won't lend to the same people they lent to before the crash.

missed a payment on your CC........ forget it
missed a mortgage payment ........... forget it ( and there will be a lot of these)
not enough deposit......................... forget it
negative equity................................forget it
etc..

pinkshoes

ruggedtoast wrote: »

Yeah because being a young couple trapped in a negative equity 2 bed flat for a decade is all about fun and happiness.

Well it's a helluva lot better than being stuck in a rented 2 bed that's costing me more in rent that in the interest on the mortgage, and I can't even paint my bedroom or hang up a picture hook without getting vast quantities of my deposit deducted!! Oh, and then there's those S21 things that get issued when a landlord decides they want to sell or something, so just 6 or 12 months after you moved in, you have to move out again.

Negative equity may not be ideal, but being stuck in one place for 10 years yet having my own home is quite appealing compared to the above! I have no kids, and we've got enough space for two, so I guess I'll just have to hope I don't have triplets in the next 10 years.:D

pinkshoes

wymondham wrote: »

Whilst true, only people who have not experienced the pain of being in negative equity make these comments. Negative equity is avoidable if you look how things are going, other things are not.

My parents bought their current house in 1988, at the peak of the market just before the crash. 20 years on, they're mortgage free and still very happy. Negative equity didn't affect their lives in any way whatsoever, so it's not always something that matters.

It only affects those that want or need to sell.

Zammo

Pull out before you spunk any cash on this folly. You'll only regret it if you go any further.

GDB2222

pinkshoes wrote: »

My parents bought their current house in 1988, at the peak of the market just before the crash. 20 years on, they're mortgage free and still very happy. Negative equity didn't affect their lives in any way whatsoever, so it's not always something that matters.

It only affects those that want or need to sell.

I don't know your parents in quite the way you do, but I would suggest that probably it did affect them, but it wasn't catastrophic in their case.

dopester

Chris2685 wrote: »

I'm not saying they would do any of those things, just saying how they have an influence depending on what they lend!

Yes. And broadsheet newspapers have discussed how banks might stop lending altogether if the market gets worse, except to the best credit risks. How it might even become a cash-only market.

pinkshoes wrote: »

My parents bought their current house in 1988, at the peak of the market just before the crash. 20 years on, they're mortgage free and still very happy. Negative equity didn't affect their lives in any way whatsoever, so it's not always something that matters.

It only affects those that want or need to sell.

That "crash" was so fully different. Although I accept auction rooms were offloading property for much less than the Financial Mail's review on it below.

http://www.thisismoney.co.uk/mortgages/house-prices/article.html?in_article_id=447023&in_page_id=57

The average house price peaked at £70,246 in May 1989 (a 28.8% increase on the year before), according to Halifax. It then fell very slowly, losing just 2.1% by the following May and another 0.4% in the next year (to May 1991). Declines then gathered pace with the worst monthly fall coming in September 1992 when values tumbled 3%.

After false dawns in 1993 and 1994, the market finally bottomed out in July 1995 at £60,965. That marked a 13.2% decrease over six years.

This time so many more people are over-loaded with debt. Banks have over-extended themselves as well in the boom. House prices are much higher and so powers of leverage come in to play with the different magnitudes of order.

Mix in the fact we now have a new breed of landlord classes, all the MEW-ers, how over-borrowed and so over-spent the Government is this time, and how deep far and wide business and industry is exposed to problems, and how there are so much many more people working in the public sector (easy fix to unemployment... let the Government hire so many more people) who can't all sit pretty in jobs whilst the private sector suffers hard.