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

chewmylegoff

do they really face "disaster"? all 1.5 million of them?

unless all 1.5 million of these particular homeowners get made redundant or suffer a significant cut in income, then no, they don't.

unless of course either (i) everything they ever did was funded by MEWing based on the constant rise of property prices; or (ii) they took out mortgages that they couldn't afford in the first place, which isn't anyone's problem but their own.

LilacPixie

The biggest concern for me about that article is the CML being unable to guarantee that mortgage companies will not require extra payments from mortgage holders who's LTV goes over the maximum allowed by their current deal. Many people can comfortably manage their mortgage payment but would struggle if asked to produce several thousand pounds to pay down their mortgage.

chewmylegoff

skap7309 wrote: »

I agree, however if so many of us are poised to buy at the bottom then it is unlikely that low will ever be seen again. All about timing from now on.

last time round, prices were essentially stagnant at the bottom for about 4 years, so unless you're really bloody slow, it's unlikely that you could miss the bottom.

of course what you would miss out on is the end of the panic before the bottom, where you could have overshot the bottom, but it's obviously impossible to accurately judge when that time is until some time after it happened.

chewmylegoff

LilacPixie wrote: »

The biggest concern for me about that article is the CML being unable to guarantee that mortgage companies will not require extra payments from mortgage holders who's LTV goes over the maximum allowed by their current deal. Many people can comfortably manage their mortgage payment but would struggle if asked to produce several thousand pounds to pay down their mortgage.

in theory this could be a problem, but since the banks cannot prove what the LTV is without the property changing hands in a market value sale i find it hard to believe they are going to start adjusting the LTV ratio of their mortgage books and demanding more money.

Thrugelmir

chewmylegoff wrote: »

last time round, prices were essentially stagnant at the bottom for about 4 years, so unless you're really bloody slow, it's unlikely that you could miss the bottom.

of course what you would miss out on is the end of the panic before the bottom, where you could have overshot the bottom, but it's obviously impossible to accurately judge when that time is until some time after it happened.

That would be the case if the housing market consisted of identical houses at identical prices. A particular house will always fetch more. Perhaps due to location for eg. Therefore when it does come on the market there could be bidding between several prospective purchasers.

With large companies laying off a considerable number of employees, the effect on house prices could be far more localised and as you say stay stagnant for years.

LilacPixie

chewmylegoff wrote: »

in theory this could be a problem, but since the banks cannot prove what the LTV is without the property changing hands in a market value sale i find it hard to believe they are going to start adjusting the LTV ratio of their mortgage books and demanding more money.

I find it hard to believe myself... but if they did then it truly would be a disaster.

PasturesNew

They've not insisted on maintaining LTV for BTL mortgages to date, so nobody would be rushing in to do it for homeowners. Ever.

MissMoneypenny

BenL wrote: »

In addition, my g/f is probably in negative equity with her house.

Is she facing disaster, no, she is one of the happiest people I know with a nice home for her and her daughter and IR cuts benefiting her to about £150 a month or something now.

I however have my savings rates trashed.

Given the choice between negative equity and low interest on savings, I would choose the latter. Could easily move to another area for work if my job went.

MissMoneypenny

skap7309 wrote: »

I agree, however if so many of us are poised to buy at the bottom then it is unlikely that low will ever be seen again. All about timing from now on.

That's what the Wilsons seem to have thought. They started buying their properties at the bottom of a crash and thought a crash would never happen again....yet here we are in a bust again. Boom and Bust seems to be part of our culture.

bo_drinker

skap7309 wrote: »

I agree, however if so many of us are poised to buy at the bottom then it is unlikely that low will ever be seen again. All about timing from now on.

Every cloud. :j