Double DIP

stelaconcepts

Views differ as to whether a D,D recession will happen or if we never got out of the first one anyway.
Was there a recovery or just a cover up that made the original problems worse.

In the short term prospective buyers may benefit from the upsurge of available properties and seller willingness to cut prices.

but arrears and repossessions could rise because of increased unemployment.

To offset the risk banks will lend less and at higher rates.

They will introduce even more strick criteria such as even higher deposit requirements.

This will make it even harder to get a mortgage to buy a house and much much harder to sell a house because credit is getting tighter.

MikeJ74

stelaconcepts wrote: »

Views differ as to whether a D,D recession will happen or if we never got out of the first one anyway.
Was there a recovery or just a cover up that made the original problems worse.

In the short term prospective buyers may benefit from the upsurge of available properties and seller willingness to cut prices.

but arrears and repossessions could rise because of increased unemployment.

To offset the risk banks will lend less and at higher rates.

They will introduce even more strick criteria such as even higher deposit requirements.

This will make it even harder to get a mortgage to buy a house and much much harder to sell a house because credit is getting tighter.

FTBers will need a much bigger deposit in years to come, getting a mortgage will get very very difficult.

The FSA is now worried about those who took out an interest only mortgage.

It believes too few people who have this type of mortgage put in place an investment vehicle where they can save enough to pay off the capital part when it eventually ends.

Because of these concerns the FSA is considering the full scale banning of all interest only mortgage products.



A house is only worth what someone is willing and ABLE to pay for it.

nembot

To be perfectly honest, interest only mortgages were just a means to an end for the powers that be. They helped many rent from the bank because they couldn't afford to buy. It's just a scheme designed to screw the layman/woman over, the real tragedy of this situation is many people think it's fine.

If you've got an IR mortgage and you aren't overpaying - you are RENTING your house, not buying.

CLAPTON

nembot wrote: »

To be perfectly honest, interest only mortgages were just a means to an end for the powers that be. They helped many rent from the bank because they couldn't afford to buy. It's just a scheme designed to screw the layman/woman over, the real tragedy of this situation is many people think it's fine.

If you've got an IR mortgage and you aren't overpaying - you are RENTING your house, not buying.

is it wrong to rent?
is it wrong to rent with a built in option to buy?
is it wrong to rent with security of tenure?
is it wrong to rent with the prospect of a capital gain or capital loss (but no worse than when buying)

seems to me a sensible option for people in a limited set of circumstances but not suitable for the many

MikeJ74

is it wrong to rent with the prospect of a capital gain or capital loss (but no worse than when buying)

You could say is it better to rent when you can see rents and house prices falling for the next few years?

Graham_Devon

MikeJ74 wrote: »

Because of these concerns the FSA is considering the full scale banning of all interest only mortgage products.

It doesn't look to be full scale. They will still be available in certain cases. Don't know what these cases are, but I assume you'd be able to switch to interest only for instance if you were on repayment, and were having severe difficulties. Just my thoughts.

Interest only has it's place, but it was usef far to excessively as a way to afford a property, or afford a bigger property than you could otherwise on a repayment.

There are a few on here using them to their advantage very well. But as with everything, the majority, it seems, saw it as a way to extend to a better place, or simply afford a mortgage.

CLAPTON

MikeJ74 wrote: »

is it wrong to rent with the prospect of a capital gain or capital loss (but no worse than when buying)

You could say is it better to rent when you can see rents and house prices falling for the next few years?

maybe
it's different for different people
for a family, the prospect of having your own home which is 'rented' on an interest only mortgage with long term security of tenure may well be preferrable to a 'rented' home which is rented from a landlord with little security of tenure.

and I don't see rents or house prices falling over the next 3-4 years unless we really do have another recession

chucknorris

nembot wrote: »

If you've got an IR mortgage and you aren't overpaying - you are RENTING your house, not buying.

I assume by IR you mean interest only (IO)? I have 4.5 IO mortgages, for a start you seem to be ignoring the fact that IR only does not necessarily mean that a payment vehicle does not exist. For example all my mortgages used to be endownment mortgages (which are/were classed as IO only). However due their poor performance I got rid of them. I could pay half off them off them off right now (or sell 2 properties and pay them all off), but as they are all lifetime trackers and I am making very good profits far in advance of current savings rates that wouldn't be particularly clever would it.

Why would I want to overpay when I am getting between 4.5% and 7% (yes 7% although sadly that bond matures this November) on my savings but only paying just over 1% on my mortgages.

365days

Interesting. I only pay interest only as at the moment it is all I can afford to pay. However my payment is £400 cheaper than rental for my property would be.

I am my own landlord. I won't get 2 months notice to leave. When I can afford to pay more I will. It's not ideal but seems the most sensible option to me at the moment, but happy to listen to why it might not be.

chucknorris

365days wrote: »

Interesting. I only pay interest only as at the moment it is all I can afford to pay. However my payment is £400 cheaper than rental for my property would be.

I am my own landlord. I won't get 2 months notice to leave. When I can afford to pay more I will. It's not ideal but seems the most sensible option to me at the moment, but happy to listen to why it might not be.

You've highlighted the very inportant non financial reason why you are better off, you are in control of your own destiny. You can get a cat or dog, fit a new kitchen or bathroom, plan well ahead, etc. Poor old Macque had to vacate at short notice, can't be good can it?

1984ReturnsForReal_2

House prices are on the way down recession or not.