Anyone Nervous?

Dan:_4

neas wrote: »

If i was in a situation to buy i prob still wouldnt, just when i first decided not to buy in dec 2007 when prices werent falling rapidly and yoy was still positive and everyone was saying it will rise, then level, then fall just a little ,then fall just a bit, then fall 10%, then fall 15%, then fall 20%, then fall 30%.

I still wouldny buy, because my brain tells me something is weird.

The crash we had now was caused by credit crunch
To solve the credit crunch and repair banks/confidence the BOE reduced interest rates to a RECORD LOW of 0.5%....
Next stage we will start to see those interest rates creep up to 6%+ to reduce inflation during a recession.
The next stage of the crash will happen at this point, even if prices recover during this period it would be about 5% up... then another 20% down again.


In summary the crash we had was an artificial crash, the next crash will be the traditional inflation, everyone crap themselves one.

Neas - Why would interest rates rising to 6% cause house prices to rise 5% then fall 20% ?

Dan:_4

Dan: wrote: »

Neas - Why would interest rates rising to 6% cause house prices to rise 5% then fall 20% ?

I notice you have quickly logged out to avoid answering my question - I will therefore assume your just talking utter nonsense.

wolvoman

wheresmydoshat wrote: »

when 95% mortgages become readily available again, thats when the housing market will slowly start improving.

what we are seeing now is just a lull in the "worst month in decades" statistics we have been used to seeing recently.

the fact of the matter is you need FTB's in order to help get the market going again, and most will only have 5-10% deposits.

we're holding. for now.

I think we're closer to those 90/95% mortgages than you think.

1. House prices rose last month and are flat for the year - this means the banks don't have to worry so much about write-downs and insuring against them with lower LTVs.

2. The banks are recapitalising at a very fast rate.

3. The current mortgage rate spread is huge. LIBOR at 1.4%, mortgage rates up at about 5%. Of course this is causing 2, but it also means there is a risk premium already built in.


2005-2007 the banks took on a risk-risk approach to both rate spread and LTVs. They are currently risk averse on both counts. Once one of those changes back to risk appetite then buyers will flood back in.

wheresmydoshat

^^ i agree, i think 90% will slowly start to become available again over the next few months.

i need them to, we've "only" got a 10% deposit.

Thrugelmir

Dan: wrote: »

I notice you have quickly logged out to avoid answering my question - I will therefore assume your just talking utter nonsense.

I think reading the comments. That its suggested that a rise in prices will happen in any event. As there is sufficent demand for prices to rise in the shorter term. However the longer term is that prices will fall again by a significant amount.

Not an unreasonable view.

Thrugelmir

wheresmydoshat wrote: »

^^ i agree, i think 90% will slowly start to become available again over the next few months.

i need them to, we've "only" got a 10% deposit.

The money's available in the market to borrow already at 90% LTV?

So why wait?

Dan:_4

Thrugelmir wrote: »

I think reading the comments. That its suggested that a rise in prices will happen in any event. As there is sufficent demand for prices to rise in the shorter term. However the longer term is that prices will fall again by a significant amount.

Not an unreasonable view.

Care to explain why this will happen?

neas

Dan: wrote: »

I notice you have quickly logged out to avoid answering my question - I will therefore assume your just talking utter nonsense.

Unfortunately I cant devote all my time to the forum, unlike yourself. I make a comment and may read it a few hours later. I apologise if this disturbs your highness.



Now onto why i would think this. If you had read my post previous house price crashes werent caused by a credit crunch, a lack of credit for borrows, so FTBers and everyone else would be unable to purchase a house as nobody would lend the money... this caused a downward spiral.

Now the banks are starting to lend again.. the 0.5% interest helps them shore up their finances while charging you 4-6% interest on your mortgage as opposed to at max giving 3% to savers. Basically its a profit making exercise this year or so to counter act the losses banks have paid.

While interest rates have unfortunately been set so low at 0.5% it will help inflation to take hold, while RPI is now negative this is actually because of the BOE lowering the interst rates and not a real deflation. Most items, food, clothing and petrol etc have risen quite significantly in the last 2 years and will maintain and increase from this.

Basically its just my thoughts on the matter im not an economic guru by day, so it could be wrong. But i think if prices do recover itll be a short recovery as inflation takes hold, bank of england raises interest rates to combat it which leads to people struggling once more on mortgages except this time the banking system can survive it... unfortunately alot of home owners wont so it will be 1990 all other again with high repossesions and prices falling.

Btw, you could lighten up mate, its just a discussion not life and death :P. Or find that special someone in life i dunno just be happy

Thrugelmir

Dan: wrote: »

Care to explain why this will happen?

Markets can only go 2 ways. Up or down.

Personally taking a broad view of the UK economy, the Global economy, and the UK budget deficit. Its very difficult to find sufficent reasons to support prices at the level they are.

Thats not to say that certain individuals, or localities may not profit. But the wider picture is very unclear. How many people are hanging on from selling in the belief that prices will recover.

I work part time for a business services company. So speak to people from a broad spectrum of industries and organisations. What comes through is a lack of confidence and uncertainty in the shorter term. A complete lack of desire to longer term committment. This suggests that we are in for a bumpy ride for some time to come.

Dan:_4

neas wrote: »

Unfortunately I cant devote all my time to the forum, unlike yourself. I make a comment and may read it a few hours later. I apologise if this disturbs your highness.

Im sorry, it's Friday, im bored, and just want to get in the pub.

neas wrote: »

Now onto why i would think this. If you had read my post previous house price crashes werent caused by a credit crunch, a lack of credit for borrows, so FTBers and everyone else would be unable to purchase a house as nobody would lend the money... this caused a downward spiral.

Agreed.

neas wrote: »

Now the banks are starting to lend again.. the 0.5% interest helps them shore up their finances while charging you 4-6% interest on your mortgage as opposed to at max giving 3% to savers. Basically its a profit making exercise this year or so to counter act the losses banks have paid.

Agreed. But the banks profit is a lot lower for those on trackers and the SVR.

neas wrote: »

While interest rates have unfortunately been set so low at 0.5% it will help inflation to take hold, while RPI is now negative this is actually because of the BOE lowering the interst rates and not a real deflation. Most items, food, clothing and petrol etc have risen quite significantly in the last 2 years and will maintain and increase from this.

It is unfortunate for you because you have a stash of savings. It is very much good for me as i've saved 1000s in reduced mortgage payments, this out-weights the price of a loaf of bread going up by 10 pence. It is also very fortunate for small businesses which may have managed to stay afloat during this recession

neas wrote: »

Basically its just my thoughts on the matter im not an economic guru by day, so it could be wrong. But i think if prices do recover itll be a short recovery as inflation takes hold, bank of england raises interest rates to combat it which leads to people struggling once more on mortgages except this time the banking system can survive it... unfortunately alot of home owners wont so it will be 1990 all other again with high repossesions and prices falling.

I don't think prices will recover. I think prices will stay around this level (10% either way) for the next 3 or 4 years.

Rising interest rates will just mean people will be paying what they were in 2007, they could afford it then, so why not again?

I also very much doubt that they will go up in massive chunks, it will be about 0.25% per month - nice and steady increases, so people can cope - otherwise they will destroy all the work they have done. This will happen regardless of inflation.

neas wrote: »

Btw, you could lighten up mate, its just a discussion not life and death :P. Or find that special someone in life i dunno just be happy

I will be okay, once im on the beer. :beer: