1.5m homeowners face 'disaster' if house prices keep falling, MPs warned

pickles110564

housesitter wrote: »

People don't drive Ferraris becasue it's a good car.

Oh really, do you think ronaldo would have walked away from that smash in a nova?

prowla

The bubble was caused by people betting that house rises would continue to rise in perpetuity.
Obviously they wouldn't.
(The value of your investment may go down as well as up.)
Now the gamblers are reaping the rewards.

They were chivvied along by the banks who got all caught up in their own momentum and forgot to keep an eye on reality.
Now they are in trouble all of their own making.

I do feel very sorry for the people who had to move house and got caught up in it all though.

neverdespairgirl

damanpunk wrote: »

The only thing crap about plasma's is the energy consumption! Even then I'd rather pay the extra £100 a year for the superior picture.

£100 a year for a better picture? My guess is, you watch too much TV (-:

neverdespairgirl

pickles110564 wrote: »

Oh really, do you think ronaldo would have walked away from that smash in a nova?

DO you think he's have had a smash in a nova?

cheeky_lil_monkey

housesitter wrote: »

You've lost nothing then becasue you never had the 30K, just wah the house might have been worth. Or in 3 years since getting the mortgage you paid off 30 grand of it? :eek:

If you can't afford it now, then you over stretched and didn't think of contingency plan. As you should have been aware because enough people have said it in the past; circumstances change.
If you went for a short term mortgage, you chose cheap deals and affordability over long term plans and stability.

Those who fixed on 10year deals are rubbing their hands together with glee. Those on 2 year deals are worrying.

Including the deposit we've put £30K of our own money into this place, yes. So we've paid off more or less £10K of our mortage in about 1.5yrs (since I started working).

At no point have I said we can't afford what we currently have. We're lucky in that we're both in well paid jobs and have been able to pay off about £10K in 2yrs as well as having a good chunk of money in savings (You never know when you might need it). We have a further 2yrs left with our deal, 5yr was the most we could get at the time which wasn't set at a stupidly high interest rate. We know we could afford the mortgage on the type of place we're looking to buy, but with not being able to sell, that just doesn't look like it's going to happen.

ad9898_3

chucky wrote: »

MEWing should not be allowed as easily as it can be done.

If I remember rightly previously, real justification had to be proved for the purpose of the re-mortgage. Now it can be done quite easily, these are one of the controls that need to be out in place.

A good post, and you are correct chucky. It should never have been allowed only for serious home improvements (extensions, garages etc)

I still believe MEW funded a hell of a lot of the boom in the UK, it's just been part of a whole line of cheap credit, the tap has now been turned off, lets hope it stays off, for good.

It will be much better for the UK economy in the medium to long term, of course short term it's really tough for a lot of people, including Brown, who is only interested in the short term. His only concern is to get another term, stay in office for another 4 years then step down, anything else would be seen as failure for him personally.

Hence we see him stacking up all the problems to a point somewhere after 2011, at which time, it will be 'nothing to do with him':rolleyes: .

mbga9pgf

ad9898 wrote: »

A good post, and you are correct chucky. It should never have been allowed only for serious home improvements (extensions, garages etc)

I still believe MEW funded a hell of a lot of the boom in the UK, it's just been part of a whole line of cheap credit, the tap has now been turned off, lets hope it stays off, for good.

It will be much better for the UK economy in the medium to long term, of course short term it's really tough for a lot of people, including Brown, who is only interested in the short term. His only concern is to get another term, stay in office for another 4 years then step down, anything else would be seen as failure for him personally.

Hence we see him stacking up all the problems to a point somewhere after 2011, at which time, it will be 'nothing to do with him':rolleyes: .

It accounts for 4.8% of GDP as a result of consumer spending. Which means this recession has got legs for a 4.8% drop in GDP before we even get started on secondary effects, the collapse of the financial sector, housing market and global trade. I still reckon this recession will wipe off the last 5 years of growth from the UK.

whathavewedone

Going back to the issue of negative equity mortgages I do not think these are the same as offering FTBS 125% mortgages.

They are simply there to enable people to move house. After a recession when prices are rising this is not a great risk for the bank as the money that their borrowers are saving by buying a bigger house at the bottom of the market outweighs the risk of them taking their negative equity with them.

There's much less risk involved doing this at a time when house prices can only rise than there is in offering 125% mortgages during a boom as borrowers are buying property at inflated prices. Clearly not just anyone should be able to get them but if you earn good money, have kept your job through the worst of your recession, haven't defaulted on your mortgage and don't have other debts then why should you be punished for life just because you bought a property at the wrong time?

If people were stuck in their one bedroom flats forevermore this would be dreadful for the economy as it would completely stagnate. Banks make money by lending. Eventually the bad debts will get written off, the books will balance and they will lend again.

mbga9pgf

No the bad banks would go bust.

125% mortgage = 25% in negative equity from day one. Especially since they were issuing these under IO terms as well.

They should not have ever existed, and regulation should be brought in limiting people to a minumum 10% deposit for their first homes. And I think it will.

whathavewedone

None of the people that I know who got negative equity mortgages at the end of the last recession are in negative equity now. My sister left the house that she had a negative equity mortgage on with a 100k deposit to put down on a new place and that was in 2000 before price rises had gone really crazy. The other 50k had gone on the debt owed to the bank and work she carried out to the house which increased it's value.

The old style NE mortgages were nothing like the mortgages offered during the boom. You had to have an immaculate credit rating, you had to show months of payslips and bank statements and the interest rate was pretty high. They were only offered to people who were considered a good risk. Add that to the fact that house prices had bottomed and it really wasn't much of a risk at all.

I don't see them being offered during the recession, while prices are falling and interest rates are low as that would be a nonsense. Once prices and interest rates start rising though I'm sure they will be. Not necessarily interest only without a repayment vehicle though.