U.K. Home Prices Rise After London Reaches Record, Group Says

doire_2

More UK averages based on low transactions then......*yawn*

Harry_Powell

ruggedtoast wrote: »

I've always said people should buy if its right for them and they can afford it.

As far as risky advice goes. Well I work with a chap, him and his wife sunk all their savings, £40k into a house in London, along with a £210,000 fixed rate interest only mortgage, in 2007.

Now they are about to be booted onto the banks SVR, whch they can't afford. They are having real problem remortgaging onto another product as despite the £40k they put in the lender says they are now almost in negative equity. There are no more interest only products available to them.

I really hope they can keep their home, it is no fun seeing a friend so worried every day.

This is what I've been saying since I joined this site, that being a 'bear' or 'bull' isn't a lifetime choice, it's a feeling about a particular market AT A PARTICULAR POINT IN TIME.

The bears were correct to be pushy with their advice back at the height of the housing market in 2007, but by the time we had seen 20% falls in the market, and at the point where they should have been modifying their views, they remained just as Bearish and continued with the same "don't buy" advice.

In any market, the percentage risk is proportionate to the percentage rise or fall of the market. As the housing market fell, the percentage risk of overpaying for a house also fell. As the market has risen, the percentage risk of overpaying for a house has risen. Yet, the views of the 'bear' and 'bull' gang remain as constant as Pi. Madness.

It's very stange to witness a group of otherwise intelligent people hold rigid onto their viewpoint, regardless of the evidence around them.

IveSeenTheLight

ruggedtoast wrote: »

As far as risky advice goes. Well I work with a chap, him and his wife sunk all their savings, £40k into a house in London, along with a £210,000 fixed rate interest only mortgage, in 2007.

Now they are about to be booted onto the banks SVR, whch they can't afford. They are having real problem remortgaging onto another product as despite the £40k they put in the lender says they are now almost in negative equity. There are no more interest only products available to them.

Interesting anecdotal.
When in 07 did they buy?
What fixed interest rate were they on?
What is their current SVR?
Which area of London?
what is their repayment vehicle?

Certainly from the outside it's hard to see how they are in negative equity
You say they had a £210k mortgage with an addiional £40k deposit, so presumably a £250k property.

Even taking that they bought at the top of the London index in Nov 07, the index number was 381.8, the currentindex is 361.7 marking a 5.3% drop in value.

this would roughly make their property worth £250k x 0.947 = £236,750, which is greater than the £210k mortgage which would mark their negative equity level.

Of course if they bought at the lowest point index in 07 which was 341.8 (Jan 07) their property has increased by approx 5.82% or an increase of £14,555.

Of course these are all averages and taking the LR data for the whole of London. Better analysis could be made if more detailed information was made available.

IveSeenTheLight

doire wrote: »

More UK averages based on low transactions then......*yawn*

So we shouldn't consider the fall in prices during 08 as these were even lower transaction levels :rolleyes:

Pobby

ruggedtoast wrote: »

I've always said people should buy if its right for them and they can afford it.

As far as risky advice goes. Well I work with a chap, him and his wife sunk all their savings, £40k into a house in London, along with a £210,000 fixed rate interest only mortgage, in 2007.

Now they are about to be booted onto the banks SVR, whch they can't afford. They are having real problem remortgaging onto another product as despite the £40k they put in the lender says they are now almost in negative equity. There are no more interest only products available to them.

I really hope they can keep their home, it is no fun seeing a friend so worried every day.

I hope they can as well. Saw what being repoed did last time around. Then the miserable badgering for 10`s of thousands of pounds that the lender wanted from the mortgagee. I know of one guy who had a breakdown over it.

Like Brit, it is darn annoying to see £1,000s being lost in interest. However I am glad no one I know has lost their home.

IveSeenTheLight

brit1234 wrote: »

Estimate ie guess tainted.

If everything is so rossy then why am I being penalised £1,000s of interest each year on my savings. Raise rates now then.

As with any investment (shares / interest rates / house prices), prices can go up or down.
You are not being penalised, you are simply getting the current market return for the investment vehicle you have chosen.

It's your choice where you have your money and what you do with it.
If your not happy with the rate you are getting, look at alternative oppertunities.

Certainly the last year would have seen you get a better return on your investment if you put into property or shares than if you simply left in the bank.

ruggedtoast

IveSeenTheLight wrote: »

Interesting anecdotal.
When in 07 did they buy?
What fixed interest rate were they on?
What is their current SVR?
Which area of London?
what is their repayment vehicle?

Certainly from the outside it's hard to see how they are in negative equity
You say they had a £210k mortgage with an addiional £40k deposit, so presumably a £250k property.

Even taking that they bought at the top of the London index in Nov 07, the index number was 381.8, the currentindex is 361.7 marking a 5.3% drop in value.

this would roughly make their property worth £250k x 0.947 = £236,750, which is greater than the £210k mortgage which would mark their negative equity level.

Of course if they bought at the lowest point index in 07 which was 341.8 (Jan 07) their property has increased by approx 5.82% or an increase of £14,555.

Of course these are all averages and taking the LR data for the whole of London. Better analysis could be made if more detailed information was made available.

Unfortunately theyre not a statistic on graph.

Theyre actual people with a huge loan they have to pay off who were frightened into buying a place on an interest only mortgage no lender should have told them they could afford, in 2007. Largely because everyone was telling them they'd missed the boat, would rent forever etc etc and the value of their savings had been basically wiped out by the preceding two years hpi.

Basically they paid a fortune to live in an averagely grim part of London where theyve been burgled twice, once when they were asleep upstairs, because Britain ans its stupid obsession with ever rising house prices was supposedly going to put them on the path to riches.

In that time I've been renting in a lovely part of London. Money down the drain according to most but there you go.

I've had three years of nice memories, barbecues in the garden, doorstep chats with the neighbours and feeding the ducks in the park with my son. My friend has had three years of worrying about break ins and whether his car has been keyed and putting off having kids because he's worried about the mortgage.

I will forward my friend your graph, I'm sure he will find it of great comfort.

lemonjelly

lostinrates wrote: »

Hamish, the two months early is an issue: the tenants have had to be ''bought off'' on a few million pounds worth of residential property that's not underwhelming. That the tenants were willing to be is also fairly interesting. I can't imagine that they'll get better rents than say, 9-10 months ago?

No, not main line of business. An aside. To explain the conversation would be too revealing of source on open forum. Sorry! I'm fairly happy to tell you via PM if you are really interested?

I am interested (for that, read nosey ) but completely understand requirements for anonymity lir.

Pobby wrote: »

I hope they can as well. Saw what being repoed did last time around. Then the miserable badgering for 10`s of thousands of pounds that the lender wanted from the mortgagee. I know of one guy who had a breakdown over it.

Like Brit, it is darn annoying to see £1,000s being lost in interest. However I am glad no one I know has lost their home.

Without a doubt, the worst cases I've ever had to deal with, is when an advice case changes as you start advising the family following the suicide of someone in this position. Has happened to me before.

Without a doubt the hardest type of interview(s) to ever have to do, the hardest work. Consequences of every minute detail become magnified. So much harder than working with some of the most difficult client groups. Hell, I even found it more difficult than working with someone accused of crimes against children, & that ain't nice!

IveSeenTheLight

ruggedtoast wrote: »

I will forward my friend your graph, I'm sure he will find it of great comfort.

Certainly it appears that what you have said comes down to the choices your friend has made.
Indeed you insinuate that you made a far better choice in hindsight and your friend could have lived in a similar nice rented property that you have.
that's their choice and they live with their consequences.

Hopefully for your friend, they will have benefitted from an upturn in the market such that your friend is not in negative equity that he thought he might be and will be able to make a decision on his current circumstance.

Do you hope for this for your friend or do you hope for further drops to leave your friend with no options?

Jonbvn

ruggedtoast wrote: »

Unfortunately theyre not a statistic on graph.

I will forward my friend your graph, I'm sure he will find it of great comfort.

Nice side-step there! Have you ever considered politics as a career?