House Price Crash

AndrewSmith

RHemmings wrote:

Would you say that the majority of people who get into trouble with repayments are in trouble solely through their own fault? Or would you say that many people have been given mortgages beyond their realistic means to afford?

Sorry CB1979, it's question time again.

The borrowing public have to take responsibility for their own actions.

It's like the barman of a pub saying 'have another beer mate' which puts the drinker over the limit and he gets breathalised on the way home. Who does he blame? Himself, the brewery, the police, the barman?

Yes I know there are differences between alcohol and mortgages before you all jump in.

The point is that everyone has the final choice in what they do. Just because it is possible to borrow 5,6,7x income doesnt mean you have to. The mortgage companies don't 'give' people the money, they have to apply for it.

Nobody actually physically forces anyone to borrow anything. It is a concious choice of the borrower.

That said, there are advertising campaigns that in my mind are irresponsible, promoting a utopian lifestyle without focussing on affordability etc.

Andy

mystic_trev

RHemmings wrote:

A 40% correction would wipe out most of the gains of property doubling in price. A 50% correction would halve house prices, wiping out a previous doubling of prices.

True, however I own 2 btl's the one bought in 1996 has more than trebled in value and my other (1998) more than doubled. Sometime soon? There has to be some kind of correction, and this from someone who has a large investment in Property!

AndrewSmith

RHemmings wrote:

I've only viewed a small number of such properties. But the ones that I saw were not in worse condition than typical properties you see during normal viewings.

What percentage of repossessed property would you say is sold without an auction, and what proportion would go through to auction?

Previous to working for myself I spent almost 10 years in estate agency as a broker and financial services manager.

I have overseen a number of different offices from different locations, demagraphics etc etc.

It would be quite normal to have at least 2-3 reposession contract invitations from lenders per month whilst, in the same area, it would be unlikely that anything like that number would go to auction.

The only reason they would go to auction normally is either if the condition is quite poor, or they have not sold via estate agency contract.

Lenders these days will offer reposession properties via a contract basis to local estate agencies before auction owing to the obligation on them to attain the maximum possible selling price.

mystic_trev

AndrewSmith wrote:

That said, there are advertising campaigns that in my mind are irresponsible, promoting a utopian lifestyle without focussing on affordability etc.

Andy

How true - oh for the simple life!

going2die_rich

MORPH3US wrote:

Thats ok then, as long as you are sorry but get the house that you want on the cheap, who cares about the millions that face financial ruin, heartache, broken relationships and poverty!!

M

I was actually being polite, I am really not sorry for these people. They chose to take out high mortgages based on what they could afford. Anyone thats bought a home since October 2004 should have also got a document (KFI) that was just about the same from whichever place they got their mortgage from stating the different costs and what a 1% etc interest rate increase would cost to their mortgage payments. They were living in a dreamland thinking that rates would never increase or didn't even bother reading it, why should anyone care if they go under?

These people that got mortgages and were overstretched when they got it, didn't they think that interest rates would sooner or later rise? Surely you do some reading and consider it properly when commiting yourself to a £200k + loan for the next 25 years

They all went running to buying property because they thought they'd make loads of money when the house prices rise some more.

Yes banks do have some blame in this matter, but they didn't force people to go out and get a mortgage they couldn't realistically afford.

Far too many people now ask how much they can borrow, when they should say this is what I can afford, can you lend me this much or not. If it doesn't buy you a property then you go back to saving till it does.

Come January, all those that didn't consider it properly will really suffer - interest rate looking like it'll come before christmas (probably November) and then when they still spend loads at chrismas added to the higher fuel costs for this winter, will surely push a good few over the edge.

As harsh as that time will be, it'll at least make people wake up to how stupid they are being at borrowing amounts they can't really afford over the full mortgage term.

RHemmings

AndrewSmith wrote:

Previous to working for myself I spent almost 10 years in estate agency as a broker and financial services manager.

I have overseen a number of different offices from different locations, demagraphics etc etc.

It would be quite normal to have at least 2-3 reposession contract invitations from lenders per month whilst, in the same area, it would be unlikely that anything like that number would go to auction.

The only reason they would go to auction normally is either if the condition is quite poor, or they have not sold via estate agency contract.

Lenders these days will offer reposession properties via a contract basis to local estate agencies before auction owing to the obligation on them to attain the maximum possible selling price.

At the time you were an estate agent, were properties selling quickly, or selling slowly? In my local area properties are often sitting on the market for months or over a year. And some of these are reasonably priced. How long will a lender leave a property with an estate agent before auction?

MORPH3US

going2die_rich wrote:

I was actually being polite, I am really not sorry for these people. They chose to take out high mortgages based on what they could afford. Anyone thats bought a home since October 2004 should have also got a document (KFI) that was just about the same from whichever place they got their mortgage from stating the different costs and what a 1% etc interest rate increase would cost to their mortgage payments. They were living in a dreamland thinking that rates would never increase or didn't even bother reading it, why should anyone care if they go under?

These people that got mortgages and were overstretched when they got it, didn't they think that interest rates would sooner or later rise? Surely you do some reading and consider it properly when commiting yourself to a £200k + loan for the next 25 years

They all went running to buying property because they thought they'd make loads of money when the house prices rise some more.

Yes banks do have some blame in this matter, but they didn't force people to go out and get a mortgage they couldn't realistically afford.

Far too many people now ask how much they can borrow, when they should say this is what I can afford, can you lend me this much or not. If it doesn't buy you a property then you go back to saving till it does.

Come January, all those that didn't consider it properly will really suffer - interest rate looking like it'll come before christmas (probably November) and then when they still spend loads at chrismas added to the higher fuel costs for this winter, will surely push a good few over the edge.

As harsh as that time will be, it'll at least make people wake up to how stupid they are being at borrowing amounts they can't really afford over the full mortgage term.

TBH mate, I agree with most of what you say about people over stretching themselves and its their own fault. It is just the thought of you sitting there praying for a price crash just so you can save yourself £10,000 that sickens me.

A mortgage rate increase doesn't bother me too much. Most of the high street banks would only offer us £100k when there are 2 of us, both graduates earning £20k a year. For £100k round here we would get a scrubby dive. Even these postage stamp sized 1 bed flats that are springing up are £130k+.

We stretched ourselves to £125k 100% mortgage (we did pay £1000 which we happened to have spare after fees). We fixed the rate for 5 years and overpay by the maximum 20%. In 5 years, who knows what will happen but we have a nice house to live in and a guarantee that our payments won't increase for those 5 years.

I'm glad we purchased when we did!

However a lot of stupid / careless people will be in serious trouble if there is a house price crash. Some of those could be your friends / family. I just hope if you get the crash you so badly want, that your £10,000 saved is worth all the heart-ache suffered by your friends.

M

RHemmings

MORPH3US wrote:

However a lot of stupid / careless people will be in serious trouble if there is a house price crash. Some of those could be your friends / family. I just hope if you get the crash you so badly want, that your £10,000 saved is worth all the heart-ache suffered by your friends.

M

If there's a house price crash, then the only losers will be those stretched far enough to be in negative equity, or those who wish to downsize or leave the property market. For those who would like to move up the property ladder, to a better house or area, a house price crash is an advantage. Even if the value of their own property goes down, the values of more expensive houses that they would like to move to will go down by as much or maybe even more. So overall, they'll be able to own the property they would want to without having to take on as much debt as they would otherwise.

going2die_rich

MORPH3US wrote:

TBH mate, I agree with most of what you say about people over stretching themselves and its their own fault. It is just the thought of you sitting there praying for a price crash just so you can save yourself £10,000 that sickens me.

....

However a lot of stupid / careless people will be in serious trouble if there is a house price crash. Some of those could be your friends / family. I just hope if you get the crash you so badly want, that your £10,000 saved is worth all the heart-ache suffered by your friends.

M

A housing crash would save me a lot more than £10k (especially if the adjustment was something like 40%, which is unlikely though), and it isn't how much I am saving, it's actually to do with being able to afford an actual property. I am unwilling to overstretch myself for a property just to get on the property ladder.

I am sure some of my family and friends would struggle with any sort of crash but we all make our own choices. Everyone paying more than they can afford has pushed the prices up so much, so surely sooner or later something will have to give way.

I am simply being honest that when this does occour it will be a postive aspect for me and most none home owners as we will be able to actually get a decent property without being overstretched. Yes it does mean others suffer, but at the minute I am part of the not being able to get on the property ladder that are suffering.

It's just the way of life, nothing personal to anyone that will be negatively effected by this. In a perfect world we'd all have our own homes without any problems of affordability, but we don't live in a perfect world.

If my attitude to this is any less sickening, I hope for a lottery win more than a house price crash, then I wouldn't mind if the house prices doubled

hechizero

The base priciple of economy is supply and demand. Speaking specifically about London, demand outstrips supply. This state is certainly not a precursor for a house price crash. Unless there is a stock market crash or a similar economic tragedy, the property market will remain strong in the capital.