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Debate House Prices
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Low interest rates will support house prices until 2014
Comments
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My imaginary couple earn £60k between them. They bought a lovely house for £150k a good few years ago with a lovely £30k deposit that they had from the magic deopsit bunny.
Their gross income per month is around £5,000, or around £3,600 net after all that nasty stuff has been taken off.
Before the crash they were on an interest rate of 5%, then the crash came and lo and behold they find themselves on 2%. Happy times! Then inflation hits a few years later and they find themselves on 7%. Boo.
5% = £709 per month or 20% of net income
2% = £512 per month or 14% of net income
7% = £858 per month or 24% of net income
Please, for the love of sweet Christ on a unicycle, no debates on average wage. I'm just painting a picture.
Aside from the scenario of someone losing a job (which I know will be slightly more prevalent over the next few years, but can happen at any time if you're unlucky), is the above scenario such a nightmare for average people? You adjust your spending accordingly, tighten your belt in hard times and most sensible people will save a bit of money during the good times.
I fully realise that people who have stretched themselves stupid, fall on to bad luck and don't look around for sensible mortgage deals will go under. But what percentage meet this criteria? When we got our mortgage we worked out what it would be at 10%, understood that we'd be pretty much okay and live accordingly.
No point in taking the post seriously then?
Can someone else paint a picture of a joint income of £35,000 who bought a house for £190,000, with no deposit, during the days when banks would throw money at anyone?0 -
Can someone else paint a picture of a joint income of £35,000 who bought a house for £190,000, with no deposit, during the days when banks would throw money at anyone?
I can! its the one where a tracker means they've got some breathing room, the bank doesn't reposess, admittedly he does lose his job because he works in the private sector but gets interest on his mortgage paid for him, he gets given a car by the government and drives it past a speed cameraPrefer girls to money0 -
prob doesn't even have a colander imoPrefer girls to money0
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No point in taking the post seriously then?
Can someone else paint a picture of a joint income of £35,000 who bought a house for £190,000, with no deposit, during the days when banks would throw money at anyone?
The problem with your theory is that very few people did this!!!!!
The CML stats for LTI are readily available.
The average FTB loan at peak was 3.4 times income, it is now right around 3 times income.
The average 2TB loan was much lower, and never crossed 3 times income even at peak.
Most borrowers were in fact fairly responsible.
So whilst I don't deny a few people acted like idiots and overborrowed, they were very much the exception and not the rule.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
50% of mortgages are now SVR/Trackers - it was close to 40% previously.HammerSmashedFace wrote: »11 million mortgages in the UK, the majority now made up of trackers and SVR's, which of course are vulnerable to rate rises.
if rates start to rise those that have been sitting comfortably on their SVR's will try to remortgage onto Fixed Rate mortgages.
vulnerability to rates rises is all defendant on their LTV and the percentage of income spent on mortgage payments0 -
Take him to court Graham they are not allowed to give advice like that. They can show you products but can not recommend what you should do or what you should do in the future.
Mortgage advisors offer advice on mortgages not on the route you should take and the future.
I would be surprised you were given such advice as you could now sue the company and no doubt the guy would get sacked.
(I have never met on mortgage advisor who has advised to take a mortgage or what there future options would be, it is quiet literally more than their job is worth)
How could I take him to court?
Tell the judge thats what he said? Without any evidence whatsoever?
I didn't go down the route he suggested anyway. But I think you will find this was primarily the way sub prime was sold.
As an aside. This thread is obviously divided into two categories. Those sheltering price rises and those saying they can't continue.
One thing I have noticed is those sheltering the price rises all seem to be talking about today, right now. Not looking ahead. The whole article is about sheltering price rises to 2014. But no one on that side seems willing to look past todays stimulus.0 -
Graham_Devon wrote: »How could I take him to court?
Tell the judge thats what he said? Without any evidence whatsoever?
I didn't go down the route he suggested anyway. But I think you will find this was primarily the way sub prime was sold.
As an aside. This thread is obviously divided into two categories. Those sheltering price rises and those saying they can't continue.
One thing I have noticed is those sheltering the price rises all seem to be talking about today, right now. Not looking ahead. The whole article is about sheltering price rises to 2014. But no one on that side seems willing to look past todays stimulus.
Sorry knowing some mortgage advisors (and financial) I find it hard to believe you were told you would get a cheaper than SVR rate in the future.
Unless you have not noticed you can not get advice of these type of advisors.
(which I have always found odd in nearly 10 years of having a mortgage)
It is nothing to do with my view on prices it is to do with I think you portray a rogue comment as the norm, even one you agree is "hearsay".
I have pointed out it is against there guide lines to do such a thing.0 -
HAMISH_MCTAVISH wrote: »Reposessions for this year were previously estimated to be 75,000. This has now been reduced to 48,000 expected this year. In the last recession, it peaked at over 90,000 per year.
Indeed, that forecast was made before the introduction of £200 billion funny money (which has scared people out of cash and into assets) and the reduction of the base rate to 0.5%, which allows all those were struggling or losing an income to to get a cushy landing onto an SVR or huge reductions from their tracker.
Still 48k is pretty bad when considering what has been done to help them, if it hadn't of been done most would agree that repo's would have easily breached 100k if not a lot more with prices continuing to fall off a cliff.
However, we all know you get nothing for nothing in this world and the policies implemented are temporary and unsustainable. The chickens will come home to roost eventually, it's all just a matter of time.
This recession will be unlike any other, watch and see.0 -
HammerSmashedFace wrote: »However, we all know you get nothing for nothing in this world and the policies implemented are temporary and unsustainable. The chickens will come home to roost eventually, it's all just a matter of time.
This recession will be unlike any other, watch and see.
Good to see you bearish types have pulled yourselves off the floor and are now back with the absoloute certainties that you were spouting twelve months ago
I am still scratching my head wondering why you bought a house though 'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
HammerSmashedFace wrote: »generally it's only competition that would drive them down and I don't see where that competition is going to come from.
I thought recently there was news that we are likely to see more banks on the high street and this was viewed as good news i.e. more competativeness for the customers
http://news.bbc.co.uk/2/hi/business/8338138.stmHammerSmashedFace wrote: »Like I say banks do not want to lend to many of the people who they were falling over themselves to get business from pre Autumn 2007, they'll be after a much smaller part of the market, those with loads of equity, leaving millions on crap rates.
Agreed, lending instutions had distanced themselves from people with higher LTV requirements when prices were dropping as a way of reducing their risk.
If prices have stabalised or indeed risen as seen this year, the risk is already reduced for the lenders, hence we are starting to see a return to higher LTV's being available:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0
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