FTB's "Missing Deal Of A Lifetime"

Sibley

I'd just like to ask these House price crashers.

If your dream comes true and houses drop say 60%. If they went up 10% a year for the following 6 years would you feel unhappy?

For some reason you want the people who have made money this way to feel bad.

Let me tell you. I feel fanastic about it. I reckon to have made £100,000 on my investment house maybe more. When I sell it that £100k will be in my bank to spend on my retirement. Why would I feel better if I didn't have anything?

You just save and get on the ladder like everyone else.

Buying and owning a house takes hard work,risks and you have worries a renter would never understand. The dripping tap doesn't fix itself, new fence doesn't suddenly appear etc etc.


I'm not 100% into the landlords who do the 10% deposit interest only mortgage lark. They are the sharks not normal homeowners trying to make a better life for their families.

nembot

Nobody cares Sibley, go to bed.

Henry_P_Chester

Sibley wrote: »

I'd just like to ask these House price crashers.

If your dream comes true and houses drop say 60%. If they went up 10% a year for the following 6 years would you feel unhappy?

For some reason you want the people who have made money this way to feel bad.

Let me tell you. I feel fanastic about it. I reckon to have made £100,000 on my investment house maybe more. When I sell it that £100k will be in my bank to spend on my retirement. Why would I feel better if I didn't have anything?

You just save and get on the ladder like everyone else.

Buying and owning a house takes hard work,risks and you have worries a renter would never understand. The dripping tap doesn't fix itself, new fence doesn't suddenly appear etc etc.


I'm not 100% into the landlords who do the 10% deposit interest only mortgage lark. They are the sharks not normal homeowners trying to make a better life for their families.

I don't think they would be happy if house were rising 10% per year after they bought. As this would make the next step up 'the ladder' very expensive and near impossible to afford. As an owner occupier I would be very happy with falling prices after I bought. It means you can take a bigger step up for less money.

DervProf

DervProf wrote: »

Peak affordability eh ? Since when ? Last Tuesday ?

I think you stated elsewhere in this thread that house prices were rising at the minute, and have been doing so for the past year. Wouldn`t that mean that peak affordability has been and gone ? (No doubt the explanation is something like "you can now get a FTB mortgage with an introductory rate of 0.4%, with the Temptum & Fleece Um Building Society".

And what "absurdly high deposit requirements" are those you speak of ?

Come on Hamish, I`d like to hear an explanation.

julieq

You have to laugh really. Far from the idea that house prices are being bolstered by unusual measures (i.e. low interest rates essentially) which is the standard bear mantra, everyone seems to agree that if we went back to anything approaching normal lending, prices would rocket. Therefore it's the size of deposit not the base interest rate that is holding the market back and actually the banks are doing the bears a favour by standing on the brakes long enough for them to get onto the ladder.

Which many of them have taken advantage of, albeit excusing themselves to those waiting for the inevitable 50% crash by Christmas by saying they're taking the worst financial decision of their life for the good of their children.

Others are having the courage of their convictions. Good luck.

DervProf

Sibley wrote: »

I'd just like to ask these House price crashers.

If your dream comes true and houses drop say 60%. If they went up 10% a year for the following 6 years would you feel unhappy?

For some reason you want the people who have made money this way to feel bad.

FWIW. My "dream" isn`t for house prices to drop 60%, I think that somewhere near half that would bring things back to some sort of sensible level. If they went up 10% a year for the following 6 (3) years, yes I would feel unhappy, as we`d soon be in a similar situation to where we are now.

And you are jumping to the conclusion that "House Price Crashers" want people who have made money out of property (I assume that`s what you mean) feel bad. Actually, that`s not what I want. I will admit though, that I feel that there should be some financial penalty felt by those who have speculated on the property market, otherwise a valuable lesson won`t be learned - as you say "Buying and owning a house takes hard work,risks". The credit crunch should have caused a larger drop in UK house prices, but "rich" Uncle Gordon came along and gave it a helping hand. I suspect that many a 20(ish) year old will be thinking "I might just buy a property, it seems that hardly anything can go wrong". It`s that mentality that leads to property booms.

DervProf

julieq,

"Normal lending". Can you please define that ?

OK, I`ll take the liberty of giving my definition of "normal lending", the term that I hear and read in the media every now and then.

Normal lending : Normal lending is when mortgage lenders are able to issue mortgages in large enough number and size to maintain house price inflation, or at least prevent prices from falling. The opposite to this is "abnormal lending", or a "lending drought", where lenders tighten up lending criteria, so that potential borrowers can no longer "afford" to buy a property with the amount they are allowed to borrow, or are simply refused a mortgage due to inadequate deposits or income.


For the first 30 years of my life, I believed that normal lending was based on the requirement of a 10% deposit, and the maximum you could borrow was around 3.5x you income, or 3x your income + 1x your partner`s income. I also seem to remember that you either had a simple repayment mortgage, or an interest only mortgage backed up by some sort of repayment plan for the future. And for the first 30 years of my life, this normal lending was usually enough for most people to be able to buy some sort of property (apart from the late 80`s, if I rememeber correctly. The was a short, sharp housing boom which soon turned to bust).

DervProf

Sibley wrote: »

I'm not 100% into the landlords who do the 10% deposit interest only mortgage lark. They are the sharks not normal homeowners trying to make a better life for their families.

But Sibley, those landlords are the ones that have helped you make the £100K+ on your hard earned investment.

I wonder how much you would have made if self cert, interest only and low deposit mortgages had not be so readily available over the past few years ? And I wonder if the taxpayer would have had to cough up so much money to bail out the banks.

julieq

Normal lending is 10% or less deposit around 5% interest, i.e. what we have had by and large for the past 10 years or so. See that, and average prices are within range of enough people to launch the market again. The deposit is the blocking factor, not interest rates, because the banks are essentially charging those rates in any case and taking increased margins.

You're taking a moral position on a market incidentally by suggesting speculation should be punished so we learn lessons. Markets don't work like that. In fact if we had a significant fall, many more people would find themselves being punished because the economy would go back into full scale resource, and that tends to affect the less well off more than those who have speculated.

That's a fact often conveniently ignored by the crash rampers. Get what they want and everyone suffers. Modest HPI and essentially most people win. There's no scenario where everyone gets rich and no-one has to take chances with their finances. No-one I know on the "bull" side wants rampant HPI, but there's nothing morally wrong about taking a chance on any speculation and winning. In fact if there is an undefensible position it's about expecting safe over inflation savings rates. The money is either sitting doing nothing, in which case it's creating its own bubble, or it's being used for higher risk investments. Which includes mortgage lending as a very large portfolio component.

And the taxpayer hasn't spent a penny bailing out the banks. The taxpayer is making a profit at this point in time. The taxpayer is on the other hand having to pay for a very large deficit caused largely by banks not being able to pay tax. And why can't they pay tax? Because house prices fell and bad debt provision increased. If you want public spending and safe savings returns you'd better pray for a strong housing market.

DervProf

I read somewhere that about 60% of the UK`s wealth is in it`s property. Maybe that`s why I need to pray for a strong housing market. I`m not religious, so I don`t believe that praying will help. I also don`t think that it`s a very good idea to allow our country to become ever more reliant on it`s property market.

And yes, I am taking a moral position on the property market. It`s a pity more people haven`t over the past decade.