House prices to fall by 40% from peak, 3-4 million in neg. equity

Gorgeous_George

StevieJ wrote: »

So economists are suddenly the oracle of Delphi, I thought they knew FA according to you lot.

Anybody who agrees with me is a switched on cookie. Anybody who disagrees with me is a eejit.



GG

besonders1

luvpump wrote: »

35 to 50 % !!!! :T ...:T

I house prices can triple in value from the late nineties to the peak of the 2007 boom then I dare bet anyone that they can just as easily come down!

WTF?_2

jamtart6 wrote: »

grr i hate it when they say "millions in negative equity" as the only people in negative equity are those trying to sell!! so what if people are in negative equity but not moving, give em 10 years and they'll all have plenty of equity. just sensationalist headlines!!

So ... as long as they don't need to remortgage/renew a deal, or move to another house, or sell up for personal reasons, or lose their income (cough, recession) .... absolutely nothing to worry about then :rolleyes:

You weren't one of the people cheering on would-be FTBs around this time last year by any chance?

StevieJ

!!!!!!? wrote: »

So ... as long as they don't need to remortgage/renew a deal, or move to another house, or sell up for personal reasons, or lose their income (cough, recession) .... absolutely nothing to worry about then :rolleyes:

You weren't one of the people cheering on would-be FTBs around this time last year by any chance?

Pretty much spot on that !!!!!!, well done.

GDB2222

jamtart6 wrote: »

grr i hate it when they say "millions in negative equity" as the only people in negative equity are those trying to sell!! so what if people are in negative equity but not moving, give em 10 years and they'll all have plenty of equity. just sensationalist headlines!!

Surely you are over-stating your point? They are in negative equity, but in the circumstances you outline that is not too serious. In other circumstances, neg equity clearly is very serious indeed.

mr.broderick

carolt wrote: »

According to the economist on Moneybox on Radio 4, this lunchtime, house prices are set to fall 35-40% from peak, leaving 3-4 million in negative equity, as prices go back to 2002 levels.

Didn't catch his name - can't re-listen yet, but here's the Moneybox page for when it becomes available - only caught a bit of a lengthy discusion on house prices, so if anyone else heard more and can comment, that would be great:

http://news.bbc.co.uk/1/hi/programmes/moneybox/7699362.stm

What time scale are the 35-40% drops? 2 years, 10 years?
You would like to think that the millions of people with mortgages will be chipping away at the capital during this period and hence reducing negative equity or are all these people on interest only mortgages who aren't paying any of the capital at all? I don't think negative equity is the problem. I could pass through a period of negative equity if we see 50% drops but i don't think it would matter that much to me, the £300k house round the corner that i adore would be then be worth £150k and it would cost me considerably less to move up to that than it would if i bought it tomorrow?

mewbie_2

But Mr. B. Take your point about moving up the ladder, but is it possible to sell a house if you are in negative equity and move the mortgage to a different house? Not sure that makes sense so here in plain English.

Buy house 200k. Mortgage 175k
Sell house 150k. Shortfall 25k.

What happens? Can I buy that better house for 200k with a mortgage of 225k?

My brain hurts. Help me someone clever.

ad9898_3

mr.broderick wrote: »

What time scale are the 35-40% drops? 2 years, 10 years?
You would like to think that the millions of people with mortgages will be chipping away at the capital during this period and hence reducing negative equity or are all these people on interest only mortgages who aren't paying any of the capital at all? I don't think negative equity is the problem. I could pass through a period of negative equity if we see 50% drops but i don't think it would matter that much to me, the £300k house round the corner that i adore would be then be worth £150k and it would cost me considerably less to move up to that than it would if i bought it tomorrow?

The quote was for 2 years, I heard the program, its about time there was a bit more of a balance in the media, especially the BBC.

If it come to pass, it's great news for FTB'rs, people moving up the ladder, people with children.

Bad news if you bought in the last 6 years, worse news if you are highly leveraged BTL'r <snigger>, bad news if you are the Wilsons <PMSL:D>

sabretoothtigger

mewbie wrote: »

But Mr. B. Take your point about moving up the ladder, but is it possible to sell a house if you are in negative equity and move the mortgage to a different house? Not sure that makes sense so here in plain English.

Buy house 200k. Mortgage 175k
Sell house 150k. Shortfall 25k.

What happens? Can I buy that better house for 200k with a mortgage of 225k?

My brain hurts. Help me someone clever.

No you must cover your debts. If you sell then you owe them 25k plus the deposit for any new mortgage. This is how you and the banks (who also borrowed) go bankrupt

Its bad even if you dont move because it makes the banks look a very bad risk.

Their secured debt turns into partially unsecured loans and in theory they should be charging twice as much interest for that kind of risk, since our banks rely on others for funding it will cost them a similar amount to stay afloat

Maybe they should only allow building societies to do mortgages, the whole system gets screwed up too easily.
Its like the banks were playing jenga and some of them just had to take it too far

Cannon_Fodder

mr.broderick wrote: »

...or are all these people on interest only mortgages who aren't paying any of the capital at all?...

Got me wondering about the scale of the problem...

http://www.fsa.gov.uk/pubs/consumer-research/crpr56.pdf

"Product sales data shows that around 19% of all new mortgages are written on an interest-only basis with no record of a repayment vehicle in place."

Those with "3. A Rough" or "4. No Idea" how they would repay their mortgage "would equate to around 58,000 borrowers in the year."

Every year...