Fantasy house prices

StevieJ

julieq wrote: »

Errm, the reason interest rates are low is NOT because of 125% mortgages in the UK, it's NOT because of interest only mortgages (if that is a problem it'll be a problem in 20 odd years) it's because of reckless lending in the US which brought the banking system to the edge of the abyss. Lending to people who could NEVER pay back their loans under any circumstances to create a debt based product to sell on to others.

They know that, they just don't wish to hear it, it doesn't fit in with their UK debt junkie spiel.

nearlynew

I love this idea that a few hundred thousand p1ss-poor americans that couldn't pay their mortgage brought the whole world to this economic crisis.

They really must have some clout.

julieq

They did...

Emy1501

julieq wrote: »

Errm, the reason interest rates are low is NOT because of 125% mortgages in the UK, it's NOT because of interest only mortgages (if that is a problem it'll be a problem in 20 odd years) it's because of reckless lending in the US which brought the banking system to the edge of the abyss. Lending to people who could NEVER pay back their loans under any circumstances to create a debt based product to sell on to others.

And if above inflation house price rises are unsustainable, so are above inflation interest rates on savings. Where, as the bears are fond of asking, does the money for that come from?

Do you believe everything GB tells you? 1 in 10 people were at least 2 months behind with debt repayment between 2006-2008. House prices started to fall in Nov 2007 nearly a year before the real problems of the CC hit us. The UK has one of the highest levels of personal debt per person. Just like Man U have found out you cant simply keep rolling over debt. The UK public would have found out for themselves this at sometime regardless of whether the credit crunch had happened or not.

To be honest I suspect that if there had been no CC and the UK had seen a normal recession Houseprices would have fallen much further than they have as the Uk would not have got away with QE .5% interest rates etc. In a funny way I suspect the CC actually did us a favour in the UK.

As for interest only people only take out an interest only mortgage because they cannot actually afford the mortgage unless they are doing BTL. A CE of a large broking firm actually said recently that people with IO mortgages were basically dead they just did not know it yet.

StevieJ

Emy1501 wrote: »

Do you believe everything GB tells you? 1 in 10 people were at least 2 months behind with debt repayment between 2006-2008. House prices started to fall in Nov 2007 nearly a year before the real problems of the CC hit us. The UK has one of the highest levels of personal debt per person. Just like Man U have found out you cant simply keep rolling over debt. The UK public would have found out for themselves this at sometime regardless of whether the credit crunch had happened or not.


As for interest only people only take out an interest only mortgage because they cannot actually afford the mortgage unless they are doing BTL. A CE of a large broking firm actually said recently that people with IO mortgages were basically dead they just did not know it yet.

Remind me when did Northern Rock go bust (I know they were bailed out) I think I first became aware of potential problems when the market dipped in Feb 2007.
Ah yes there it is.
http://news.bbc.co.uk/1/hi/6994099.stm

Interest only mortgages can be quite handy if you lose your job, the kind govt picks up the whole tab :T

julieq

Emy, people take out interest only mortgages for a lot of reasons. I probably would if I needed one because I reckon I could easily do better with the repayment part in terms of return on investments than the effective rate you get by essentially overpaying the cost of the money.

And fundamentally, there is no risk, because you need absolute house prices to reduce over a 25 year period to even lose a proportion of the principal. That is not going to happen. Worst case, you sell up after 25 years and pocket the equity, you're then renting just like someone who didn't buy. In reality people will see their income increase in absolute amounts (because of inflation) and in real terms (because of promotion).

And what is a high level of personal debt? An £150K mortgage and £20K credit card debt? Against a lifetime earnings of a couple of million at average wage compounded. It's laughably negligible.

The CC had almost nothing to do with the UK situation. We didn't have unmanageable debt. We didn't have high default rates on mortgages. We had an overheated housing market which would eventually have corrected in some way.

I sense a change in bear psychology as the reality of the situation is sinking in. From a supremely misguided confidence that this was the crash to end all crashes, we're now getting sulking sour grapes because someone - government - stepped in to ensure that a serious crisis of confidence didn't send the economy crashing and burning.

There's this idea that governments are acting contrary to natural law so the vengeance of the Almighty will come down and smite us with great force. Where in fact it looks like the stimulus did what it needed to do, we're returning to a situation where we have more business confidence, which is good for everyone.

Emy1501

StevieJ wrote: »

Remind me when did Northern Rock go bust (I know they were bailed out) I think I first became aware of potential problems when the market dipped in Feb 2007.
Ah yes there it is.
http://news.bbc.co.uk/1/hi/6994099.stm

Interest only mortgages can be quite handy if you lose your job, the kind govt picks up the whole tab :T

Er house prices fall because people are forced to sell their house. Northern Rock going bust did not mean people should not have been able to pay their mortgage. What the CC meant was many simple could not roll over their debt as before. Many subprime borrowers who were given the impression that they could have rolled over their debt at the end of their fixed rate or tracker found themselves on high interest rates when they realised no one wanted to take on their rolled over debt.

Emy1501

julieq wrote: »

Emy, people take out interest only mortgages for a lot of reasons. I probably would if I needed one because I reckon I could easily do better with the repayment part in terms of return on investments than the effective rate you get by essentially overpaying the cost of the money.

And fundamentally, there is no risk, because you need absolute house prices to reduce over a 25 year period to even lose a proportion of the principal. That is not going to happen. Worst case, you sell up after 25 years and pocket the equity, you're then renting just like someone who didn't buy. In reality people will see their income increase in absolute amounts (because of inflation) and in real terms (because of promotion).

And what is a high level of personal debt? An £150K mortgage and £20K credit card debt? Against a lifetime earnings of a couple of million at average wage compounded. It's laughably negligible.

The CC had almost nothing to do with the UK situation. We didn't have unmanageable debt. We didn't have high default rates on mortgages. We had an overheated housing market which would eventually have corrected in some way.

I sense a change in bear psychology as the reality of the situation is sinking in. From a supremely misguided confidence that this was the crash to end all crashes, we're now getting sulking sour grapes because someone - government - stepped in to ensure that a serious crisis of confidence didn't send the economy crashing and burning.

There's this idea that governments are acting contrary to natural law so the vengeance of the Almighty will come down and smite us with great force. Where in fact it looks like the stimulus did what it needed to do, we're returning to a situation where we have more business confidence, which is good for everyone.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6401725.ece I suspect NR is not much different. Still want to tell me we would never of seen our own CC

In the mid 90's Leeds football won the premership and got to the semi finals of the CL and the chairman was seen as a hero. A few years later they were bust. They gambled on their team over achieving for years to come. I get the impression that GB is doing this at the moment. It may pay off it may not.

I'm still waiting for someone to explain exactly where all this growth is going to come from. What exactly is the plan. where is the 3.5% growth to replace banking and mewing in 2011 ging to come from.

LydiaJ

LydiaJ wrote: »

You make owning a home out to be something that can only be achieved if you don't put a foot wrong:

Form stable relationship young and stay together
Both partners get (and keep) well-paying jobs
Buy house young
Pour all excess income into house for a few years
Have kids only if/when mortgage manageable

OR

Be born before 1975 and buy before 2002

If you missed out on the second option and "fail" on any single part of the first option - eg don't meet partner until older, lose job, have kids too soon, split up from partner, etc - well then, tough, you don't deserve to be able to buy.

I accept that that is how it is at the moment. But just because it's worked out OK for you, doesn't mean that everyone will agree with you that it's OK for society. Some of us would like to see a society where home ownership isn't limited to such a small elite.

JonnyBravo wrote: »

I agreed with all your post right until the last bit.

"Small elite"????

Do you know how many people own their own house?

Of course the people taking option 2 (buy first property before 2002) aren't a small elite. There are millions of them, and they own most of the houses.

I think the people able to take option 1 (maintain two decent incomes with no childcare costs, job losses, relationship breakdowns etc) are a small elite, and that the vast majority of people who missed option 2 are stuffed - you can buy a family sized house, or you can have kids, but not both. (At least, it seems that way in the SW, where I am.)

skap7309

rictus123 wrote: »

I dont know how they come about stuff like this. I dont know how some people end up in such low paying jobs in life. Im sorry but if you are wanting to buy but cant because you only earn 15k then thats your problem, not everyone elses, you need to make yourself earn enough if you want it enough.

Whilst i kind of agree with you, i find it a little hypocritical of you to state this then as your sig states you are in debt. Therefore, you yourself have had to borrow for whatever reason because you wage is not big enough.

Please, think before putting things like this.