prices still falling but activity increasing.

kennyboy66_2

IveSeenTheLight wrote: »

S

Will a change of 3.34% of your take home pay make that big a difference to affordability?

To me no, but the data sample is so large it is a valid difference.

Additionally the low point is only 13% of earnings or 3.09 x earnings, and I don't see why there shouldn't be a chance that kind of low should not be approached.

Finally, what interest rate do Halifax use to calculate affordability. There must be plenty of people on low variable rates that we possibly will never see again.

kennyboy66_2

!!!!!!? wrote: »

The way out of the mess is to let house prices drop to a level that the market can sustain.

Once they stop falling, banks can start lending with confidence against property again because they know that they have a secure asset.

Surely this is the paradox of banking - loans are easiest to come by when in hindsight asset security is a mirage.

brit1234

Lots of people are looking including me, doesn't mean green shoots though. Mortgages are hard to get, you need huge deposits as well. I had saved £30,000 and now that is not enough. It is going to take years to raise these deposits and banks won't reduce the amount needed when prices are falling 2.5% every month.

This is just spin to deflect from the actual data is showing things getting worse.

mbga9pgf

!!!!!!? wrote: »

Lending hasn't stopped, it is severely restricted (compared to the madness of recent times) meaning that people generally can't borrow as much.

Asking prices however haven't fallen by nearly the same amount as lending has fallen and this is stymieing the whole process.

As soon as average transacted sale prices reach the level which can be supported by bank lending then prices should stabilise and start to recover towards the trend.


Deposits are getting higher (percentage wise) all by themselves as prices fall, leave the market to itself and people will be able to produce a decent deposit. Assuming they have the wherewithal to save, of course. People up to their necks in debt or with paltry amounts of savings have little hope of securing a mortgage loan any time soon, quite properly too.





How 'affordable' will servicing the mortgage required by those prices be when interest rates snap back from the crazy levels to which they have been hacked by a desperate and bankrupt government?

more importantly than the skewing by a rise in recent prices is a far more significant point. Those calcs are based off mean, not median prices. This puts the average person on a 37K salary, which, as we all know, is complete @rrse.

When recalculated using long term median home prices and wages, you discover we have another 15% drop to go yet before we are even at neutral affordability.

Face it, your equity is evaporating every month you put off selling. All this will do is give sellers false hope and end up prolonging the crash, which suits me fine, as I get longer to save a bigger deposit to come and vulture your home off you at a cut down price.

Really2

mbga9pgf wrote: »

Face it, your equity is evaporating every month you put off selling. All this will do is give sellers false hope and end up prolonging the crash, which suits me fine, as I get longer to save a bigger deposit to come and vulture your home off you at a cut down price.

So you are saying sell no mater the cost now even if you dont have too?
of course a masive glut of propertys would not drive down property prices down faster would they?

Unfortunatly for you and any other potential vulture the more prices fall the more banks write off the less chance you have of getting a mortgage the more chance you have of becoming unenployed.

Its like russian roulett now will you deposit be a house purchase or a reason the state as not to pay you housing benefit when you become unenployed? Who knows.

IveSeenTheLight

!!!!!!? wrote: »

Lending hasn't stopped, it is severely restricted (compared to the madness of recent times) meaning that people generally can't borrow as much.

Asking prices however haven't fallen by nearly the same amount as lending has fallen and this is stymieing the whole process.

As soon as average transacted sale prices reach the level which can be supported by bank lending then prices should stabilise and start to recover towards the trend.

Wooooah!!!!!
I would agree with the above in that falling prices are helping to achieve a risk acceptable level for the banks to lend with confidence

All I was saying was that your statement needed to be reversed in that house prices wont stop falling until lending is resumes with confidence

!!!!!!? wrote: »

Once they stop falling, banks can start lending with confidence against property again because they know that they have a secure asset.

mbga9pgf

Really2 wrote: »

So you are saying sell no mater the cost now even if you dont have too?
of course a masive glut of propertys would not drive down proerty prices down faster would they?

Unfortunatly for you and any other potential vulture the more prices fall the more baks write of the less chance ou have of getting a mortgage the more chance you have of becoming unenployed.

Its like russian roulett now will you deposit be a house purchase or a reason the state as not to pay you housing benefit when you become unenployed? Who knows.

No of course not. But dont expect prices to bounce bank and do a Beckett, because at the rate that money is getting destroyed, it isnt going to for a long time. The number of reposessions we can expect in the next 15 months will solve the problem with the glut. Not gloating, just a pretty honest look of where we are headed.

Fortunately for me, and I mean this sincerely, I have close friends that have recently lost jobs and are looking for work, I am not in that position. Fortunately (I am really starting to see the importance of this) I have a relatively untouchable job as regards redundancy, one in fact my bank manager has told me will stand me in good stead for getting a mortgage.

If mortgage availability falls off further, so will house prices. The fact that mortgages are overly restrictive below 25% deposits should be a good indicator as to where the big banks expect house prices to be headed during the recession.

IveSeenTheLight

kennyboy66 wrote: »

To me no, but the data sample is so large it is a valid difference.

Additionally the low point is only 13% of earnings or 3.09 x earnings, and I don't see why there shouldn't be a chance that kind of low should not be approached.

I'm not saying that it will not go below the average, but that over a 25 year period, we are almost at that average point.
With it being an average over such a long period (the standard extend of a mortgage), it would lend to the belief that it is near what you should consider as a long term affordable figure that could go higher or lower.

More importantly regarding affordability

kennyboy66 wrote: »

Finally, what interest rate do Halifax use to calculate affordability. There must be plenty of people on low variable rates that we possibly will never see again.

These figures do not say what is affordable or not and have no bearing on interest rates. They simply reflect the ratio borrowed and the amount of mortgage interest to take home pay.
While I can understand where you are coming from in that current low interest rates will be helping to pull down the mortgage interest - earnings ratio.
Therefore it is worth bearing in mind that interest rates are likely to go up during the period of a mortgage from the rates thay are at now.

I'm surprised that the mortgage interest - earnings is so low.
I would have though it was much higher.

Really2

mbga9pgf wrote: »

No of course not. ....

As I have said for months and at the start of this thread.

Forced sellers will be the driving force for prices over 2009 and any one who does not need to sell will not look to complete with forced sellers.

Personaly I think any job could be vurable even Public Sector as spending will be cut when things start too look up and general enployment improves.

mbga9pgf

Not public sector as such... and my trade is currently 50% undermanned.