First time buyers priced out...

jimibaboza

Joeskeppi wrote: »

"BTLers are buying properties and renting them back out to the people who would have bought them normally."

and here we have the reason why first time buyers are in such a pickle summed up in one sentence.

julieq

Graham_Devon wrote: »

I'd have to disagree with the line in bold.

For existing owners, when has there ever been a time of lower rates?

For those looking at buying, the story is somewhat different. But I can't think of a time when mortgage rates have been any lower, and don't think they could feasibly get any lower. So I'd have to disagree with the suggesting that mortgage rates are not particularly low.

We'll most likely never see them as low as this again in our lifetimes.

The rest, however, was reasonable, but misses, again, all the stimulus and new policies which have been created to enable people to carry on. It's difficult to say that lending wasn't a problem, when the taxpayer has had to shell out for SMI, (upping the interest rate, making it easier to claim, making it so you can claim earlier) bank bailouts (including NR, which has really held back on reposessions, instead, just letting arrears build up) amongst other stuff.

Graham, existing owners aren't participating in buying and selling and so the mortgage rates they are paying has no effect on purchase prices (excepting the very small number of forced sales). Prices are still sustained.

I'm not getting back into SMI except to say that half a billion out of a trillion is a fleabite on an elephant, and that you really do have a blind spot about the relative importance of particular statistics. You can argue that stimulus measures kept people in jobs which in turn allowed them to pay for their housing costs, but that's the limit of the effect of stimulus on house prices.

And nationalising NR had no effect one way or another on repossessions. How could it? If NR had failed, it would have failed as a deposit/savings bank due to liquidity issues, not bad debt. Had it failed, the mortgage book would have been sold on. The debt is still being repaid and the "bad bank" is running at a profit.

Graham_Devon

julieq wrote: »

Graham, existing owners aren't participating in buying and selling and so the mortgage rates they are paying has no effect on purchase prices (excepting the very small number of forced sales). Prices are still sustained.

Oh come on Julie, I really don't want to go into an inane argument again.

But homeowners paying low mortgage rates has a massive impact on house prices. namely because they do not have to sell.

If base rates were 5% right now, you and I both know full well that there would be far more houses on the market. To pretend otherwise, is pure ignornace. I don't mean that in a rude way. I'm just not sure how else to describe compltely ignoring the effects of rates on 30m+ current households with mortgages.

As for NR being nationalised, and that having no effect on reposessions, even though politicians stated in the media they would hold back on NR reposessions....well I'm lost for words.

IveSeenTheLight

Graham_Devon wrote: »

Oh come on Julie, I really don't want to go into an inane argument again.

But homeowners paying low mortgage rates has a massive impact on house prices. namely because they do not have to sell.

If base rates were 5% right now, you and I both know full well that there would be far more houses on the market. To pretend otherwise, is pure ignornace. I don't mean that in a rude way. I'm just not sure how else to describe compltely ignoring the effects of rates on 30m+ current households with mortgages.

As for NR being nationalised, and that having no effect on reposessions, even though politicians stated in the media they would hold back on NR reposessions....well I'm lost for words.

I have to disagree with the part in bold.
You know there are not 30+ million households with mortgages

http://www.cml.org.uk/cml/media/press/2883

There are 11.4 million mortgages in the UK, with loans worth over £1.2 trillion.

Even if you add BTL mortgages (1.3 million) it would total up to 12.7million mortgages
http://www.cml.org.uk/cml/media/press/2837

The 30+million households are total households

Graham_Devon

IveSeenTheLight wrote: »

I have to disagree with the part in bold.
You know there are not 30+ million households with mortgages

http://www.cml.org.uk/cml/media/press/2883


Even if you add BTL mortgages (1.3 million) it would total up to 12.7million mortgages
http://www.cml.org.uk/cml/media/press/2837

The 30+million households are total households

Ok, accepted.

Change it to 11m mortgages. Makes not a jot of difference to my point!

IveSeenTheLight

shortchanged wrote: »

Well I am actually referring to downward pressure on property prices from a lack of FTB's which julieq seems to dispute.

yet you were clearing talking aboutpaying higher prices

shortchanged wrote: »

there is going to be less incentive to pay higher prices for property.

Julie mentioned that prices could be sustained, which there have been reasons shown and we can see statistically to a degree with the lower transaction volumes and current prices.

IveSeenTheLight

Graham_Devon wrote: »

Ok, accepted.

Change it to 11m mortgages. Makes not a jot of difference to my point!

Indeed it does.
You've just wiped out the impact on 20 million properties.

Now then look at the amount of outstanding debt on these mortgages. What is the split of remaining amortization period.

If base rates were to return to 5%, I'd still be paying less than I did when they were last down to that level.

We've just seen recent reports that the paydown on mortgages was the largest ever (IIRC) with something like £7 Billion paid in the last three months of 2010.

The fact is that the number and percentage of people that will be affected by rate rises is reducing month on month as the debt is being reduced, with little pressure on increasing rates to impose the scenario your discussing.

shortchanged_2

IveSeenTheLight wrote: »

yet you were clearing talking aboutpaying higher prices

Where do you see me saying that?

I stated that a lack of 1st time buyers will eventually have a downward impact on house prices, something that julieq seems to dispute.

wotsthat

IveSeenTheLight wrote: »

We've just seen recent reports that the paydown on mortgages was the largest ever (IIRC) with something like £7 Billion paid in the last three months of 2010.

The fact is that the number and percentage of people that will be affected by rate rises is reducing month on month as the debt is being reduced, with little pressure on increasing rates to impose the scenario your discussing.

I'll help Graham a little more. In January 2009 I was paying 5.49% on my mortgage which equated to £2550 interest per year. If my rate goes to 5.49% tomorrow this would equate to £1600 interest per year.

If I could afford that rate in 2009 why won't I be able to afford it tomorrow?

geneer

julieq wrote: »

Agreed for the 3 of your list, but not the first two (and I'd replace "house price crash" with "house price deflation" because crash is too emotive a word and has no clear generally agreed definition.

Lets all agree to call the crash a teapot.
Cos if its a teapot, then clearly theres been no crash.
So the bulls win.
Yawn.



My own comment is no less childish than the wriggly attempts at realignment witnessed above, demonstrative of indemic attempts to do so amongst the property bull community (which Jules doesn't believe in but does speak for).