2.5 million people facing negative equity

adrian_bond

whathavewedone wrote: »

Of course if you're in negative equity in a one bedroom flat and you desperately want to move then it's not good news but surely if you bought that recently you would be prepared to live where you are for at least 5 years?quote]

i agree. unfortunaltey tho, im one of those people who bought in april 2007, a 1 bed flat (bought for £103, worth £105k at the time (norwich)), and would like to move in about two years or so. gonna start paying approx £200 - £300 a month overpayment into the mortgage starting april (should have about £3000 emergency money saved then). unfortunalty, we are certianly in negative equity, as although we improved the decor, and made the place nicer to live in, we only had approx six months growth before the peak. now i recon weve lost 12 - 15% realistically since that point. sniff.

were gonna really try and dig ourselves out of it but without killing ourselves or damaging our lifestyle too much. we love the place at the mo, but lots of people we know have had kids (generally a bit older than us (she is 23, im 27) so broody isnt the word!) which we would love to do, but really cant afford it yet, plus a 1 bed flat isnt the place for three, so will have to wait till we can afford a bigger place!

i remeber the hype about owning not renting at the time. "buy now cos if you try and save for a deposit, the houses you want will be £20k more than you can afford right now!". we still saved about £7k straight from uni which helped, plus got us a pretty good mortgage at the time (5.53% fixed for 5 years (at the time someone offered us £210000!) but who could have known that the adjustment would be so quick? i certainly didnt, but cant change that now!

any ideas that would help would be very much appreciated so please reply and dont be shy. cheers everyone

WTF?_2

adrian_bond wrote: »

i agree. unfortunaltey tho, im one of those people who bought in april 2007, a 1 bed flat (bought for £103, worth £105k at the time (norwich)), and would like to move in about two years or so. gonna start paying approx £200 - £300 a month overpayment into the mortgage starting april (should have about £3000 emergency money saved then). unfortunalty, we are certianly in negative equity, as although we improved the decor, and made the place nicer to live in, we only had approx six months growth before the peak. now i recon weve lost 12 - 15% realistically since that point. sniff.

were gonna really try and dig ourselves out of it but without killing ourselves or damaging our lifestyle too much. we love the place at the mo, but lots of people we know have had kids (generally a bit older than us (she is 23, im 27) so broody isnt the word!) which we would love to do, but really cant afford it yet, plus a 1 bed flat isnt the place for three, so will have to wait till we can afford a bigger place!

i remeber the hype about owning not renting at the time. "buy now cos if you try and save for a deposit, the houses you want will be £20k more than you can afford right now!". we still saved about £7k straight from uni which helped, plus got us a pretty good mortgage at the time (5.53% fixed for 5 years (at the time someone offered us £210000!) but who could have known that the adjustment would be so quick? i certainly didnt, but cant change that now!

any ideas that would help would be very much appreciated so please reply and dont be shy. cheers everyone

Not much you can do except keep your head down, hope you don't lose your job and economise and save as much money as possible.

Before you start paying the mortgage down, build a buffer of savings that will last for six months of regular living costs (including the cost of paying the mortgage and other bills).

Wookster

Negative equity isn't a problem unless one cannot keep up with the debt servicing costs.

In the event that one cannot keep up with the debt repayments and the house is repossessed, they lose the difference between the firesale price of the property and what they paid for it (generally).

ad44downey

geoffky wrote: »

House prices may decline by 30 per cent from peaks reached at the end of 2007, the Financial Services Authority said, leaving 2.5 million people sitting on homes worth
less than their mortgage.

how many of these 2.5 million can thank Krusty & Phil for their grim predicament? Shame on them.

Wookster

!!!!!!? wrote: »

Not much you can do except keep your head down, hope you don't lose your job and economise and save as much money as possible.

Good advice.

Also remember that the replacement property you'll buy when you eventually move on is also dropping in price so its not all bad.

IveSeenTheLight

Cannon_Fodder wrote: »

Can anyone find the way to paste Chart B5 from page 40 of http://www.fsa.gov.uk/pubs/plan/financial_risk_outlook_2009.pdf into here?

thanks,

Just for you, knock yourself out

IveSeenTheLight

Cannon_Fodder wrote: »

On BTL , which is around 9% of the market, any industry that was not growing by a few % every year would be considered in decline.

Not sure about that.
If the percentage is not growing or indeed declining, it means there is less competition for tenants
there will always be a certain percentage of people that will choose / need to rent

Cannon_Fodder wrote: »

Had that 9% demand not been there, each year;

- developers would not have started so many sites, employed so many people, attracted the cheap labour from EU states;
- so would have not increased the population, further reducing demand;
- dented the rental market, hitting yields, thereby discouraging unprofessional LLs;
- more of the developments they did start would be homes instead of transient rentals;
- types of developments would fit the customer demographic better, especially at FTB, where BTLs are sometimes reported as 90% of the market = less unwanted flats.

You missed out less options for renters.
competition of available rental properties means that tenants have more choice and the level of accomodation is increased.

If there was not the 9% you refer to, there would be less available rental properties and tenants may be stuck in properties that are not as good as they may have now.

sarah_elton

Wookster wrote: »

Negative equity isn't a problem unless one cannot keep up with the debt servicing costs.

Or, unless you have the cash in the bank to cover it, or the ability to borrow that cash from family/friends/bank.

Where is the stat on what percentage of the people in negative equity have no means available to repay it if they need to?

sarah_elton

adrian_bond wrote: »

i remeber the hype about owning not renting at the time.

I bought in Dec 05 and am in the process of selling. In three years, owning has cost me about £22k more than renting the same property would have. :doh:

But, I'm only selling as I'm now with OH and we're moving on up. Asking prices on the sort of houses we're looking at moving up to have already come down around £30k and we're not buying until spring-summer 2010. :T

Dithering_Dad

sarah_elton wrote: »

I bought in Dec 05 and am in the process of selling. In three years, owning has cost me about £22k more than renting the same property would have. :doh:

Out of interest, how did you calculate the £22k difference between renting and buying? It seems an awful lot of money just over the term of three years - were you renting a 1 bed studio flat at £100 pm and then bought a 4 bed family home with a £1000pm mortgage??