Mortgage plan will force house prices down, CML warns

Really2

Emy1501 wrote: »

No for me house prices will get cheaper due to affordability. We know that peoples ability to get large loans at peak were in part due to self cert loans and lenders not doing affordability checks.

Now lenders have to check affordability etc and people are now unable to remortgage without good reason it will be difficult for prices to rise. Whether we see falls in nominal or real terms depends on inflation etc. but the days of large prices are over for the future in my opinion.

I agree, as I said before this was nothing to do with HPI, it was just simply I could see no evidence lower prices enabled more to buy.

Emy1501

Really2 wrote: »

I agree, as I said before this was nothing to do with HPI, it was just simply I could see no evidence lower prices enabled more to buy.

Lower prices should mean better affordability to me. Rates do not seem to be going anywhere fast and FTB rates at the moment are not that great anyway. I do not know about unemployment in 96 compared to 89 but as I have said getting a mortgage in 96 was not very difficult.

I suspect the same if prices do fall and buying become more affordable.

Malcolm.

Emy1501 wrote: »

Lower prices should mean better affordability to me.

It's all cause and effect, it could be that lower prices are due to a decrease in affordability.

If you'd given the disclaimer 'all other things being equal', I'd agree with your viewpoint.

nembot

I think a dose of reality will push prices down, it's been a long time waiting in my personal opinion.

Emy1501

Malcolm. wrote: »

It's all cause and effect, it could be that lower prices are due to a decrease in affordability.

If you'd given the disclaimer 'all other things being equal', I'd agree with your viewpoint.

I do not have the exact figures but average prices in 89 were close to about 5x wage and were something like 2.6x wage in 96. I had little problem as a youngster with a pretty ordinary job and wage buying a 2 bed house at 3.5x wage in the south east with a 95% mortgage.

Therefore unless unemployment rates were alot less in 89 than 96 I do not se how house could have been more affordability or the avergage persons ability to a mortgage could have been easier in 89.

For me the main problem in 2006-2007 is people were allowed to get mortgages they never should have been ie some examples of self cert and therefore the reason behind the default rate in 2008. yes there will be those FTB's who get locked out in any falling market but in the majority of cases these people should never been allowed a mortgage in the first place.

The reality is though that once a natural bottom is found an the economy gets better peoples ability to get mortgages will increase. There are already lenders now doing 95% mortgages etc and probably in 5 years or so these mortgages will probably become widely available for those who can afford.

As the many on here always say there are those who never will be able to afford and its good job the FSA have pushed banks on affordability to protect the vulnerable.

Really2

Emy1501 wrote: »

Lower prices should mean better affordability to me.

I 100% agree, but for reasons that does not transpire to a boost in sales after prices stop falling, last time it took prices to get past the previous peak to really get going.

Something else is going on, either house supply is constrained after 1989 or the requirements for a mortgage did not ease until prices were over the last peak.

But these are never two point the majority of people with a certain mind set will accept.

I have been told point blank we are not short of houses and mortgages are easy to get after house prices stop falling. I would love the people who say that to explain why sales do not go back to pre boom levels not even after the last peak is passed in real terms.

Really2

Emy1501 wrote: »

I do not have the exact figures but average prices in 89 were close to about 5x wage and were something like 2.6x wage in 96.

A useful link for you
http://www.mortgageguideuk.co.uk/housing/uk-house-price-index.html

mbga9pgf

Or people are still stuck with the old message and it will take time to filter in their sh*tty 2 bed terrace isnt actually worth 170K?

When equivalent houses on their street sell for 30K less than what they expect, you can bet they will have a whinge in the daily mail, but they will still have to accept the new Status Quo.

wherediditallgothen

mbga9pgf wrote: »

When equivalent houses on their street sell for 30K less than what they expect, you can bet they will have a whinge in the daily mail, but they will still have to accept the new Status Quo.

Francis Rossi & Rick Parfitt have a lot to answer for imho.