MSE News: Halifax: House prices fell during August

mr_fishbulb

moneybunny123 wrote: »

The biggest problem isn't house PRICES - it's the ridiculous deposits that the banks insist you have

As the deposit is a percentage of the value, surely that does mean that the prices are the problem?

saverbuyer

Turnbull2000 wrote: »

A two bed terrace valued at £200,000 would be immediately accessible to a couple earning £25,000 each if they were allowed to borrow 100% of the value.

If the value of the terrace fell to £150,000, but lenders demanded a deposit of £30,000, the property would become inaccessible until they've saved up for a few years or more.

The deposit is the problem. Prices are pretty reasonable in light of two-full time incomes becoming the norm and interest rates trending downwards.

Why do you thing they are not linked?

If prices dropped 30% the banks would see the lending as less risky and would lower the deposit requirements
So 200k 30% deposit as its high risk

Price drops

140K 10% deposit less risk to the bank.

Its not deposits it’s the risk the bank see in over inflated house prices.

brit1234

Turnbull2000 wrote: »

A two bed terrace valued at £200,000 would be immediately accessible to a couple earning £25,000 each if they were allowed to borrow 100% of the value.

So if prices fell it would put all the risk onto the bank. Haven't we seen this before?

Turnbull2000 wrote: »

If the value of the terrace fell to £150,000, but lenders demanded a deposit of £30,000, the property would become inaccessible until they've saved up for a few years or more.

So this couple having the prudence to save £10,000 a year for 3 years is really a bad thing?

If I was a bank manager with his limited funds and had to choose between the couple who wanted a 100% mortgage and couldn't be bothered to save a deposit or a couple who cut their spending and save £30k deposit I'd know which one I would choose.

Turnbull2000 wrote: »

The deposit is the problem. Prices are pretty reasonable in light of two-full time incomes becoming the norm and interest rates trending downwards.

Prices are far from reasonable. Many couples tend to want to have children, its a couply type thing to do. They will go down to one salary during these times.

Or maybe we should just give up children to support artificially high house prices and your property investments.

Deposits are high because its a hedge against price falls in an overvalued market. They can only lend on their savings which are extremely limited at the moment so choose those to lend to with the lowest risk ie those with deposits large enough to protect from the falls.

As house prices fall deposits will get smaller and the banks will need smaller deposits as there is less risk from properties falling beyond a certain point.

High prices are the problem not deposits, remember loose lending created this economic mess. A return to it won't make things better but worse.

brit1234

NathanE wrote: »

This doesn't seem to be the case in London. If anything London is fast approaching and even exceeding pre-crunch levels again!

London property bubble 'about to burst'

The London property bubble could be about to burst, with the number of "distressed" sellers in the capital rising for the first time, according to one property company.

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/8746833/London-property-bubble-about-to-burst.htmlI would discount the distorted London market where foreign nationals are buying multi million pound properties to get rid of their fragile foreign currencies. 60% of properties are being bought by foreign nationals mostly as cash deposit boxes, these are mostly central London. The averages distort the 40% bought by Londoners in the suburbs, the cheaper properties. London has 2 property markets and to ignore the reality of the normal Londoner is wrong.

poppysarah

moneybunny123 wrote: »

Houses are more affordable now than 4, 5, 6 years ago. The biggest problem isn't house PRICES - it's the ridiculous deposits that the banks insist you have and the interest rates that don't reflect the BOE rate. I really feel for FTBs - they don't stand a chance unless they have wealthy, generous relatives.

[STRIKE]You are barking mad![/STRIKE] I mean you are differently sane.

Houses haven't come down very much in price and all the other bills are going up.

DVardysShadow

moneybunny123 wrote: »

Houses are more affordable now than 4, 5, 6 years ago. The biggest problem isn't house PRICES - it's the ridiculous deposits that the banks insist you have and the interest rates that don't reflect the BOE rate. I really feel for FTBs - they don't stand a chance unless they have wealthy, generous relatives.

I wonder why they insist on 'ridiculous' deposits.

moneybunny123 wrote: »

Nope. But I have a property to sell that is already worth less than what I paid for it 6 years ago, and on the flipside nothing I seem to like the look of appears to be falling in price.

I wonder what would happen if your deposit were wiped out.