Recession - How bad can things actually get?

Really2

Cannon_Fodder wrote: »

The scale of previous equity withdrawal is affecting homeowners' ability to re-mortgage, but its reversal is also taking billions out of the economy and housing market to further add to recessionary effects.

You cant just rely on home owners to cause a boom again we did the last one its everyone elses turn now.;)

Really2

Kenny4315 wrote: »

It isn't one person that has remortgaged to release equity, its hundreds of thousands. :rolleyes: Every 2 years for the duration of the housing boom.

What everone every 2 years.:rotfl:

come of it no doubt a %age did but the majority. If you think they did you are a bit delutional.

The average mortgage property still as arround £60K equity in it. That is an average so thats still a lot of money if you X it by 11.5M.:rolleyes:

WTF?_2

Kenny4315 wrote: »

If house prices tumble a total of around 35% as I feel is required to correct the market then, there's a whole heap of Sh&t on the cards, potentially civil unrest, as many lose virtually everything.

Only FTBs from recent years are in the doo-doo. My guess is that prices will revert to 2003-ish levels. Anyone who bought then or before is fine considering they will have made 4-5 years of mortgage repayments. Your negative equity will depend on how late into the game you bought - those who jumped in in 2006/7 are in a very exposed situation and will be bricking it about possible unemployment.

Even then, if they keep their job (and most will) they should get by OK though obviously with a lot of stress and you wouldn't want to be in that position.

Some will be unfortunate and lose their job and their house as well as facing possible bankruptcy if they had a lot of negative equity. Probably a lot more than in previous recessions in relative terms.

What will probably drive this home as a particularly 'bad' recession is the amount of people who will find themselves unemployed with huge amounts of debt - not just negative equity, but credit cards and personal loans etc.. This is pretty much unprecedented and is going to lead to a lot of financial pain.

Then there is the massive amount of resources sucked up into keeping the banking system on life support - that will likely make things drag out a lot longer and the people who depeneded on credit are going to find themselves under more and more pressure.

Really2

!!!!!!? wrote: »

Only FTBs ......

Good post !!!!!!.

Kenny4315

Really2 wrote: »

What everone every 2 years.:rotfl:

come of it no doubt a %age did but the majority. If you think they did you are a bit delutional.

The average mortgage property still as arround £60K equity in it. That is an average so thats still a lot of money if you X it by 11.5M.:rolleyes:

Fixed deals are generally 2 or 3 years. It isn't going to have that sort of equity shortly, total fall 35%, and no ability to seek a better deal due to lack of equity. That wipes alot of folk out.

Me personally at the peak my housing asset base was about £1.5m, I have good locations so won't get the full 35% drop, but I'd still expect the value to drop to somewhere around the £1.1m mark, I can absorb that sort of hit as I paid £700k (2006 & 2007 purchases) + £85k refurb, and sold a house bought for £120k plus £12k refurb for £324k (2007 sale) at the peak aswell. I don't ever release cash based on increased equity value. There are many individuals with properties worth say £500k at the peak would will not be able to absorb a £150k + loss in 2 years.

For me I don't mind if they go up down or sideways I win in every direction. :money:

There has been plenty of cash released from houses by non FTB's, hence the consumer spending boom, and explosion of BTL chancers (type 1).