House prices....

mark206000

Yes, and because you read it on the internet that you can 'afford' a £230K mortgage, then obviously every mortgage company will lend you that.;)

I most definietely don't. Hence why 'afford' and (not entirely accurate I know) where in the sentence!

then obviously every mortgage company will lend you that.;)And of course any who will be looking a minimum of 20% deposit so £45K. I think the reality is for most people that are looking at that £200K house on the market and whenever they try to get a mortgage they get a response like 'we will lend you £150K with a £30K deposit' and thats the problem

That's not the problem. The problem is that house prices are still too high. You think the banks should just start lending out hundreds of thousands of pounds to anyone who wants it? That's what started the mess of !

Strange the banks are demanding 20%+ deposits. You'd think that they are almost expecting houses to drop by about that much. It just so happens then the first 20% drop in prices is your money and not theirs....

We built a house there recently for which we got a bank valuation (as opposed to an estate agents) of £300K on it. There were still banks that were declining us a £140K mortgage against that because 'computer says no'. Now that didn’t make the house worth £140K did it?

No not on this occasion, it's probably worth somewhere between the two. My reference was only to selling a house, not what banks will loan out on new builds.

Therefore we have this stalemate situation whereby sellers won’t take the massive drop that is required to allow the bulk of sellers to buy, and the bulk of sellers can’t raise the cash over and above what little the mortgage company will lend them with an already huge deposit.

High house prices are of no use to anyone. Why would you want to spend hundreds more a month for a mortgage ?

Even if I own a home at £100k and I want to buy one at £200k, I need a £100k mortgage from the bank. If house prices fall 20%, my house is now worth £80k and the one i want £160k. So now I need an £80k mortgage instead of £100k, which is no small change especially when you take in account the interest over 20-25 years !

So now I've got extra money in my pocket to spend in shops and wherever else, keeps people in jobs etc instead of it going to the banks for loan and interest payments eg a black hole.

tara747

pgilc1 wrote: »

Oh i think you're quite right. However i think only a small percentage of sellers *need* to sell, and only a small percentage of the base of people who *could* buy can buy due to the strict mortgage terms in place. I dont think its as cut and dried as 'all sellers are asking too much' and 'every buyer is canny enough to not give near asking price' - i think a lot of buyers have no choice as they simply couldnt raise the funds via a mortgage at the moment.

Of course this is an internet forum where everybody has already got £100K in the bank as a deposit and noone ever has credit card debt or takes out a loan.

Well, we don't quite have £100k saved yet... but we don't have any loans or other debt.

x12yhp

tara747 wrote: »

Well, we don't quite have £100k saved yet... but we don't have any loans or other debt.

Ditto! And I am also sure that you know people who think you are very well off and don't really warrant any 'assistance'... rather it should go to those who spent every penny on their pile of bricks, got into debt to their eyeballs and actually have the things that you actually want! Strange old world!

motorguy

mark206000 wrote: »

That's not the problem. The problem is that house prices are still too high. You think the banks should just start lending out hundreds of thousands of pounds to anyone who wants it? That's what started the mess of !

Banks are undervaluing houses because it suits them to. They are then asking for high deposits. If a house is on the market for £200K, then a bank choses to value it at £150K, with a £30K deposit. IF you manage to get it for £150K, then they've got a £120K mortgage on a house probably worth £180K. Not taking much of a risk are they?

mark206000 wrote: »

Strange the banks are demanding 20%+ deposits. You'd think that they are almost expecting houses to drop by about that much. It just so happens then the first 20% drop in prices is your money and not theirs....

I think no matter what they are erring very much on the side of caution to suit themselves. They've got their fingers burned and arent going to let it happen again.

mark206000 wrote: »

No not on this occasion, it's probably worth somewhere between the two. My reference was only to selling a house, not what banks will loan out on new builds.

How would you ever know what the house is worth? The bank valued it at at a very low £300K, and you're saying its worth £220K??? :rotfl: It cost £335K to build and the site was worth about £150K.

mark206000 wrote: »

High house prices are of no use to anyone. Why would you want to spend hundreds more a month for a mortgage ?

Yup, but the market is in a position now whereby buyers cant buy and sellers wont drop the price. Its all very well going Ho Ho Ho i wont pay the prices, but then you dont get the house, so a bit of a lose lose then?

mark206000 wrote: »

Even if I own a home at £100k and I want to buy one at £200k, I need a £100k mortgage from the bank. If house prices fall 20%, my house is now worth £80k and the one i want £160k. So now I need an £80k mortgage instead of £100k, which is no small change especially when you take in account the interest over 20-25 years !

So now I've got extra money in my pocket to spend in shops and wherever else, keeps people in jobs etc instead of it going to the banks for loan and interest payments eg a black hole.

Which is exactly what the government wants you to do - spend your money in the shops rather than saving it. Well done for playing into their hands.

motorguy

tara747 wrote: »

Well, we don't quite have £100k saved yet... but we don't have any loans or other debt.

Good for you!

tight_arze

pgilc1 wrote: »

Yup, but the market is in a position now whereby buyers cant buy and sellers wont drop the price. Its all very well going Ho Ho Ho i wont pay the prices, but then you dont get the house, so a bit of a lose lose then?

If sellers won't drop the price they can't move and won't get the next house they want. Lose lose on both sides.

pgilc1 wrote: »

Which is exactly what the government wants you to do - spend your money in the shops rather than saving it. Well done for playing into their hands.

Maybe so but if no one is spending their disposable income in shops, on holidays, cars etc there would be a severe lack of jobs & businesses. Much better than your money funding a bankers bonus don't you think?

motorguy

tight_arze wrote: »

If sellers won't drop the price they can't move and won't get the next house they want. Lose lose on both sides.

Yes, however if they are not dropping their prices then it does suggest that the bulk of them dont *have* to sell. A next door neighbour to us where we used to live put his house on the market for £145K as opposed to a peak of £280K. His attitude is well sure we'll see what happens. Hes had no interest at all so far, but hes not going to drop the price because if he cant get close to that he'll stay where he is.

tight_arze wrote: »

Maybe so but if no one is spending their disposable income in shops, on holidays, cars etc there would be a severe lack of jobs & businesses. Much better than your money funding a bankers bonus don't you think?

True, however the case in point was someone spending the money they would otherwise have saved for / spent on a mortgage.

x12yhp

At the moment, most do not have to sell. That is because the government has been forced to protect them with frighteningly low interest rates. What this has meant is that people do not have to move. They can stay put. They can put prices at levels which cannot be reached by potential buyers. This means that the market is stuck. Until people start buying, the market cannot recover but people cannot start buying because prices are too high. Prices are too high because interest rates are so low that people don't need to remove. It is a loop which cannot be escaped. The low rates are delaying the inevitable - people spent more money than they could afford. You cannot fix a problem by simply changing your reference point. Someone has to pay back the debt eventually, it cannot just be 'written off'. Just wait and see... inflation has been high for years (inspite of the recession) and has been covered up by the use of things like cpi instead of rpi, careful choice and re-organisation of what is used as a measure of cpi... it will catch up with us. Rates will rise and the loop will be broken. People will be forced to sell, people will have to drop their prices, the market will start moving again and THEN has the chance of recovering. The present situation does not allow that, it merely delays it in the vain hope that a miracle will occur.

Oh and I do debate your logic about banks not lending because it suits them. They were lending very freely and it became obvious that the public was utterly incapable of restraining itself. Why do you so strongly believe that the public has learnt its lesson and can be trusted? The banks will lend if they consider it sensible to do so. They are not trying to slow the market; that is absurd! The market makes them money!! They are not there to help you out, they are there to make money. It seems to me that thousands of expert analysts think there is a risk. You disagree. With respect, what qualifies you to do so?!


Edit: Sorry, maybe a bit aggressive. A lot of people talked the market up when they really should not and that is partly responsible for the mess. I just think it inappropriate to play that same game when it was proven wrong such a short time ago. We need to quit pretending nothing is wrong, we need to take the medicine and try to get better. Rant over.

motorguy

x12yhp wrote: »

At the moment, most do not have to sell. That is because the government has been forced to protect them with frighteningly low interest rates. What this has meant is that people do not have to move. They can stay put. They can put prices at levels which cannot be reached by potential buyers. This means that the market is stuck.

Are you REALLY suggesting that the goverment should force up interest rates to the point that people HAVE to sell their family homes at a heavily discounted price?? :eek:

Brilliant idea - tens of thousands of homes repossessed and hundreds of thousands of others crippled with massive debts. Classic.

x12yhp wrote: »

Until people start buying, the market cannot recover but people cannot start buying because prices are too high. Prices are too high because interest rates are so low that people don't need to remove. It is a loop which cannot be escaped. The low rates are delaying the inevitable - people spent more money than they could afford. You cannot fix a problem by simply changing your reference point. Someone has to pay back the debt eventually, it cannot just be 'written off'. Just wait and see... inflation has been high for years (inspite of the recession) and has been covered up by the use of things like cpi instead of rpi, careful choice and re-organisation of what is used as a measure of cpi... it will catch up with us. Rates will rise and the loop will be broken. People will be forced to sell, people will have to drop their prices, the market will start moving again and THEN has the chance of recovering. The present situation does not allow that, it merely delays it in the vain hope that a miracle will occur.

The real problem is that first time buyers cant get on the property ladder because of the massive deposits being asked of them. Deposits of 20-30% are the norm, compared to 5% 10 or 20 years ago (note that that was the norm prior to this past 5 years). Thus you're asking first time buyers to raise £30-40K. That has a simple knock on effect up the market. If you look at the price comparison sites for mortgages, they arent offereing 95% mortgages, THEN valuing the houses low, theyre offering 70% mortgages. THATS where the problem lies.

x12yhp wrote: »

Oh and I do debate your logic about banks not lending because it suits them. They were lending very freely and it became obvious that the public was utterly incapable of restraining itself. Why do you so strongly believe that the public has learnt its lesson and can be trusted? The banks will lend if they consider it sensible to do so. They are not trying to slow the market; that is absurd! The market makes them money!! They are not there to help you out, they are there to make money. It seems to me that thousands of expert analysts think there is a risk. You disagree. With respect, what qualifies you to do so?!

So how come the market survived for decades with 95% mortgages? Or do you only know what you've read on the internet about this last five years?

Banks simply dont have the money to lend because the bigger banks they have been borrowing off have stopped lending them so much. Simply put, they have less money to lend, therefore they are being incredibly choosy about who they lend it to and are lending it only to people who are cash rich.

So, yes, those thousands of analysts who have a relatively small pocket of money to lend, agree they shouldnt be taking any risks at all with it, however we need to get back to the previous situation whereby banks can provide 95% loans - and thats not a Halifax problem, or an Abbey problem - thats a problem affecting the world banks as a whole.

x12yhp wrote: »

Edit: Sorry, maybe a bit aggressive. A lot of people talked the market up when they really should not and that is partly responsible for the mess. I just think it inappropriate to play that same game when it was proven wrong such a short time ago. We need to quit pretending nothing is wrong, we need to take the medicine and try to get better. Rant over.

No one is suggesting that, but where are all the 95% mortgage offers that were freely available 5-25 years ago? Or as i said have you only been an internet analyst this past five years?

motorguy

OK, a question for all those advodates of the 'house prices are too high' brigade, WHICH of the following is likely to jump start the market?

Proposition 1
A 'forced' further price drop of 25% (possibly by higher interest rates forcing people to sell their homes because they cant afford them anymore). This would mean a £160K house repriced at £120K. Previous deposit of 20% = £32,000, new deposit = £24,000.

Proposition 2
A reintroduction of the 95% mortgage. This would mean a deposit of £8,000 on the £160K house.

Which is going to be easier to achieve for first time buyers - an £8K deposit or a £24K deposit?

**HINT** - what was working for 25+ years before the madness of the last five years?