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

mewbie_2

mr.broderick wrote: »

Not sure mewbie.
I was thinking if my house was worth £180k and i had a £90k mortgage and
i wanted to buy a house for £300k i would have to borrow £210k.
If my house halved it would be worth 90k and i would owe the same. The house i wanted to buy would be £150k so i would get a £150k mortgage. In other words i could buy a house £120k more expensive for a £60k mortage increase. Is that right? My head hurts now. (Mortgage would have to be interest only with no payment vehicle for me to cope )

My head hurts again now. But I see where your coming from. I had done the sums, sort of, assuming negative equity as a result of house price drops. But yes, if you don't fall into negative equity, then that next move up becomes cheaper the more they fall.

Please no more sums, I'm more comfortable with abusive threads, it's somehow easier to deal with.

treliac

Pobby wrote: »

I do a few hours a week for our local credit union. It`s amazing that many problem debtors are in their 60`s or 70`s. It has been said that they have carried on living the same life style as when they were working. Debt is bad enough but to be in debt at retirement would scare me.

Age hasn't brought them wisdom or solvency. Many have probably still been supporting adult sons and daughters too.

neverdespairgirl

IveSeenTheLight wrote: »

100% spot on.
It's amazing how many on here believe in uniform drops accross the whole of the UK

I don't think anyone does believe prices will be the same across the whole of the UK.

IveSeenTheLight

neverdespairgirl wrote: »

I don't think anyone does believe prices will be the same across the whole of the UK.

I never said uniform prices.
I said uniform drops or to be more specific a uniform percentage drop.
Don't tell me you haven't seen "House prices to drop 50%"

neverdespairgirl

IveSeenTheLight wrote: »

I never said uniform prices.
I said uniform drops or to be more specific a uniform percentage drop.
Don't tell me you haven't seen "House prices to drop 50%"

I mis-wrote it, I intended to say "price drops"

Of course I've seen "house prices to drop 50%". But I don't think anyone means every single property (or area) will drop the same % amount, in fact, the same people often talk about newbuild flats or certain areas dropping more than others.

dopester

IveSeenTheLight wrote: »

I never said uniform prices.
I said uniform drops or to be more specific a uniform percentage drop.
Don't tell me you haven't seen "House prices to drop 50%"

Perhaps you've jumped to the wrong opinion.

Those posts could mean "house prices to drop 50%"... but not a claim of it being uniformed, with other areas to drop even more than 50%.

Of course you might be able to claim Buckingham Palace and a few other top-end places haven't dropped 50% so you can post how you were proven right, even if Aberdeen property prices generally crash 50% or more.

mystic_trev

Three million homeowners, or more than a fifth of households, could end up in the trap of negative equity, with mortgage debts larger than the value of their property, as house prices continue to plunge, new City estimates show.

Bank of England calculations that the numbers caught in negative equity could soar from about half a million at present to 1.2 million by 2011, are seen as too optimistic in the bleakest assessment yet of the threat.

Michael Saunders, of Citigroup, says that the Bank's estimates are too optimistic since they are based on a survey of households where homeowners are asked for details of their own debts, financial assets and property value. Mr Saunders points to previous Bank research which showed that individuals tend to overstate the value of their homes by up to 20 per cent, and understate debts by 10 to 15 per cent.

Adjusting for this bias, he calculates that a likely further drop of 15 per cent in house prices — on top of the 15 per cent slide over the past year — will leave between 2.5 and 3 million homeowners in negative equity. This would exceed the peak of 1.8 million, the number of people who were in this predicament in the early Nineties.

http://business.timesonline.co.uk/tol/business/economics/article5069045.ece

moanymoany

The two 'experts' speaking on the clip predicted 35% - 50% falls in prices. The one also predicted half a million re-possessions. It is difficult to imagine this happening, but hard to see how it can be any other way.

The measures put forward by the Government to 'end' the crisis are only going to make a minimal effect. The bank rescues did not end the problems the banks have, they only stopped a massive banking crisis - something that would have been catastrophic. The drowning swimmers may have been rescued and dragged onto the beach - but they are still in a pretty bad way!

Reducing interest rates mat be helpful in some quarters - but not overall. In the US they have low interest rates - and a disaster in the country. In Japan the 0% interest rates didn't stop the economy scraping along the bottom for years.

Cannon_Fodder

Realy wrote: »

Around £4,000 per mortgage holder.
Cheaper than a personal loan?
Who can say that was not just going to borrowed anyway.
How much have non mortgage holders borrowed?
Not defending it but if you needed a loan mewing is cheaper than a personal loan if you pay it off over the same time frame.

Would it have been borrowed anyway? No. Not in my household. So you owe £8000...


You were questioning how many/how much MEWing was done. Around £50BN per year was the answer.

Context;
MEWing was BIGGER than our ENTIRE Defence Budget.

I'm sorry BoE and NAO don't provide figures to answer every convoluted marriage of statistics that you would like to see.


As for the possibility that MEWing may be cheap and an alternative for credit cards/personal loans, the fact that;

"UK consumer debt amassed through mortgages, loans and credit cards has increased by 7.3% to £1,444 billion over the past year* up from £1,346 billion in June 2007"
"UK personal debt exceeds UK GDP for second year running"
(*year to June 2008)
http://www.grant-thornton.co.uk/press_room/uk_personal_debt_exceeds_uk_gd.aspx


...doesn't seem to have instilled a prudent ethos in the mindset of the population.


Interesting line in the middle of that article..."there is no cause for panic as personal debt is well covered by the UK housing stock"...

Errmm....they might need to revisit that opinion!!!

Cannon_Fodder

StevieJ wrote: »

What about those people that paid their mortgage down, like me.

And I paid off a £50K mortgage, too...

"total outstanding UK consumer debt amassed through mortgages, loans and credit cards has increased by 7.3% to £1,444 billion"


Wonder what the total would be if there weren't people paying off...