House Price Crash 3

Alan_M_2

I dunno, there were definate drops in my locality over the few months, then out of the blue massive rises again, also bear in mind it takes some time for the statistics to filter through so they could all be as much as 6-9 months in arrears.

There were some statistics posted earlier in this thread that effectively showed there was no crash in the early 90s. They didn't include repossetions, autioned propertyies, properties where teh key were handed back etc, so they can be very skewed.

olly300

westernpromise wrote:

My neighbours lived in an identical flat to mine and we both paid £85,000 in early 1988. They had to sell up 2 years later as they had a kid on the way and they got £59,000, so a net fall of 30% in 2 years. Those worst off were probably people who bought starter homes on huge estates: the builders were flogging off new ones at giveaway prices so second hand ones were worth even less than that.

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I was actually young when the house crash happened but due to it affecting family members and others I know, and the news stories around at that time. I remember that it affected certain types of housing very badly:
1. studio flats - people got married and couldn't sell
2. one bedroom flats -couples had children and couldn't fit them in or afford to sell
3. new houses or flats as 80's housing seems to be very poorly built - no one wanted to buy them because they could afford a better built property
4. the badly done 80's conversions -no one would buy them because they could hear their neighbours all around them.

What's interesting lots of my friends' who have brought housing have taken this stuff on board and they were between 13 and 17 when the last recession hit. Those of them who are single have mostly brought 2 bedroom flats (they rent the room out or have a family member living there), and those in couples have brought 3 bedroom houses.

westernpromise wrote:

At the same time I am surprised at people in this thread who think there should be a limit on how much banks should be allowed to advance. That seems to me to be nannying of the very worst kind. We are all responsible adults and we should all be able to take a view on whether a place is worth it or not. A situation where nobody can afford to buy anywhere is obviously completely unsustainable by definition, so some sort of correction must be due.

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Due to endownment and pension misselling, banks and finiancial advisors are actually telling people the risks of certain mortgage options and ensuring that the on the written list of things that have been talked about this is mentioned.

So yes in 10 or 20 years time there will be people claiming they weren't warned about the risks of interest only deals and making a fuss about actually having to pay the value of their home but :
1. The financial industry and banks are trying to cover their own backs legally by documentation.
2. The media, money sections in newspapers and on the internet, regularly mention the risks of this type of mortgage. I'm also sure it has been on the front page of a newspaper in the past year.

So unless people have been in a vacuum it's going to be very hard in 10 years time for someone to argue they were missold a interest only mortgage for their main property. Obviously BTL investors will have different issues.

High Street Banks also remember the last recession and will not advance money if the feel the place is over valued and you don't have a reasonable sized deposit. This is happened to friends' of mine even some in jobs where it's unlikely they will ever be without work.

In fact most of the problems I hear about property woes are with estate agents and financial companies linked to them. I know a few people who have had to start their house buying process again because of them.

lynzpower

i got an IO mortgage from a all of market broker, well before my MSE education of course

As Im raking through my docs Ive found a page which explains the risks of IO mortgages, and that I needed a repayment vehicle like an ISA. As a former member of the "want it now brigade" I agreed they told me, but ignored the advice.

I have to take responsiblity for that, and my broker will have proof if it was ever needed that they told me the risks but i chose to ignore them.

dunstonh

Due to endownment and pension misselling, banks and finiancial advisors are actually telling people the risks of certain mortgage options and ensuring that the on the written list of things that have been talked about this is mentioned.

So yes in 10 or 20 years time there will be people claiming they weren't warned about the risks of interest only deals and making a fuss about actually having to pay the value of their home but :
1. The financial industry and banks are trying to cover their own backs legally by documentation.
2. The media, money sections in newspapers and on the internet, regularly mention the risks of this type of mortgage. I'm also sure it has been on the front page of a newspaper in the past year.

Tell me about it. The old "reason why" letter has turned into a "reason why not" letter more than ever before. Strange thing is that often when advisers point out the risk, we are criticised for doing so by some as being negative.

I dont think the media have been at all helpful yet about the risks. Whilst you do get occasional warnings, they are often dwarfed by the "past performance" comments and headlines which only encourage people to jump on the bandwagon.

Alan_M_2

The trouible with these products or in fact many financial services products is what is deemed acceptable now, my well be declared illegal in 10 years time, we just don't know.

My father happedn to be caught like this with His pension with Abbey, a very established company, when He came to cash in He was screwed over for a hughe amount of the policy and now doesn't even recieve back what He paid into it. Abbey were taken to court, the policy (of which they had sold hundreds of thousands) was deemed illegal, they were fined by the FSA Millions of pounds (which goes in the pocket of the FSA).

As for the policy holders, Abbey were instructed to pay compensation if they felt it necessary, of course they didn't feel any compulsion to pay any compensation.

Endowment policies at the time were clearly sold as investment policies, I remember very clearly being told it could go up or down in value depending on interest rates etc and there was no guarantee it would pay the mortgage in full when I eventually arrived at that point in time.

Yet people are queueing up foir compensation for these products.

Never underestimate the power of litigation, the bottom line is someone ends up paying for this compensation, and it sure isn't the lenders, it's the borrowers through Interest rates.

roswell

Some more loggs for the fire just found thsi on the BBC news site

http://news.bbc.co.uk/1/hi/business/6109300.stm

1 in 3 chance of house prices falling between not and 2010

mystic_trev

I really can't see how anyone could sue for misselling over Interest rate only mortgages. If you buy a can of beans you expect to get beans in the can, so if you take out an Interest only mortgage you expect what? Anyway after the Endowment debacle, Lenders have made sure that thier records are clear, and that the borrower has signed that they understand that none of the capital will be repaid unless thay purchase a repayment vehicle to cover it.

aderbyshirelad

roswell wrote:

Some more loggs for the fire just found thsi on the BBC news site

http://news.bbc.co.uk/1/hi/business/6109300.stm

1 in 3 chance of house prices falling between not and 2010

So that mean there's a 2 in 3 chance of them rising or staying the same?

Alan_M_2

Which conversely means there's a 2 in 3 chance it won't.

These are newspaper figures which have no place in reality.

I'd be more convinced by a william Hill or Ladbrokes odds compiler giving me stats rather then PWC.

dougk_2

Thats still means the most likely case is them not falling eg.. 33% chance of them falling and 66% chance they won't.