Savers 'lose' £43bn, Mortgagees 'gain' £51bn.

chucky

people should cut their cloth according to their clothes. it really is quite simple.

DervProf

chucky wrote: »

people should cut their cloth according to their clothes. it really is quite simple.

Eh ?

I think you meant "means", not clothes, but I agree with your point.

StevieJ

Graham_Devon wrote: »

Yep, thats correct.

But I don't understand quite what is so surprising?

A) Any "normal" purchase of a house valued at 200k losing 50% would leave you 100k worse off, rather than 50k.

With the SO property, you could now buy the second 50% at half the price you originally bought the first 50%.

C) All other houses will also have dropped 50% in price. Therefore, like ANY other purchaser in negative equity, you will need to buy out the original mortgage before moving. There really is no difference.

I see Hamish has jumped in to call it Devon Economic Theory, but it's no different to any other mortgaged property, apart from you are somewhat shielded from falls dependant on your percentage.

It is simply like buying a full house at £100k, the problem is how do you move with £50k NE?, more to the point, if you move to a bigger house that is now cheaper (unlikely) you will now be paying sub-prime rates rather than the 3.99% for 10 years now on offer for people with plenty of equity. I don't see how falling house prices have been beneficial to you.

Thrugelmir

StevieJ wrote: »

the problem is how do you move with £50k NE?, more to the point,

Does it matter?

If you can afford a bigger house (bigger mortgage) then you've the income to repay the mortgage down quicker.

StevieJ

Thrugelmir wrote: »

Does it matter?

If you can afford a bigger house (bigger mortgage) then you've the income to repay the mortgage down quicker.

Not if you can only secure a punitive deal (if that), and what sort of deal do you expect to secure with 50% NE? especially if you are self employed in todays economic climate.

Graham_Devon

StevieJ wrote: »

It is simply like buying a full house at £100k

How on earth have you come up with this conclusion? If anyone could buy the same type of house for 100k, why would they buy half of one for 100k?!

Talk about moving goalposts to make you're argument work in your favour.

the problem is how do you move with £50k NE?, more to the point, if you move to a bigger house that is now cheaper (unlikely) you will now be paying sub-prime rates rather than the 3.99% for 10 years now on offer for people with plenty of equity. I don't see how falling house prices have been beneficial to you.

What?

So firstly, you've decided someone has got 50k negative equity, BUT the larger houses are not cheaper. You seem to be isolating one house and suggesting it's fallen 50% while those around it haven't got any cheaper. Which is nonsense.

Finally, why are you so worried about whats beneficial to myself? Remember, you are working on sums you have plucked out of thin air to make your argument. I'm not in 50k negative equity and never will be, unless houses become negatively priced.

You don't understand why price falls could be good for me because you want to apply your own conditions to myself, and have a go at a poster at the same time.

I've laid out above. If house prices fall 50%, I can buy more of my current house for 50% less than what I bought the original for. Wouldn't need a mortgage either if they fall 50%, so don't concern yourself too much over mortgage rates. It certainly wouldn't be concerning me.

StevieJ

Graham_Devon wrote: »

How on earth have you come up with this conclusion? If anyone could buy the same type of house for 100k, why would they buy half of one for 100k?!

Talk about moving goalposts to make you're argument work in your favour.

What?

So firstly, you've decided someone has got 50k negative equity, BUT the larger houses are not cheaper. You seem to be isolating one house and suggesting it's fallen 50% while those around it haven't got any cheaper. Which is nonsense.

Finally, why are you so worried about whats beneficial to myself? Remember, you are working on sums you have plucked out of thin air to make your argument. I'm not in 50k negative equity and never will be, unless houses become negatively priced.

You don't understand why price falls could be good for me because you want to apply your own conditions to myself, and have a go at a poster at the same time.

I've laid out above. If house prices fall 50%, I can buy more of my current house for 50% less than what I bought the original for. Wouldn't need a mortgage either if they fall 50%, so don't concern yourself too much over mortgage rates. It certainly wouldn't be concerning me.

No I didn't mean that other houses haven't fallen, I meant you were unlikely to get a mortgage in those circumstances, the rest is a thing called hypothesis (as obviously I don't know your circumstances any more than you have told us). BTW you were talking about moving to a bigger house to accommodate your son.

If you are saving money for a deposit and are in no rush to go and buy, every bit you save mounts up to a lower LTV. Every house price decrease also does the same. A bit like pensions, for every £100 I put in, my employers put more in. It's what falling prices does to any potential deposit. My hope, and thats all it is, it isn't a plan, is to have a big enough deposit on what I would class a reasonably priced house in order for my wages to allow me to do my best for my son and family, in terms of days out and time together. It's what I missed out on in a way as my parents were doing all they could to earn every penny for us. I'm determin

Graham_Devon

StevieJ wrote: »

No I didn't mean that other houses haven't fallen, I meant you were unlikely to get a mortgage in those circumstances, the rest is a thing called hypothesis (as obviously I don't know your circumstances any more than you have told us).

I'll be absolutely no worse off than anyone else trying to buy and sell at that point in time though. Which is why, as I'm in no rush, I'm saving up what I can to bring my LTV down on the next house.

Considering not many will be able to get mortgages in the examples you are using (house shaving fallen 50%), I don't see why you are so concerned about myself and highlighting my circumstances on the forum?

chucky

StevieJ wrote: »

No I didn't mean that other houses haven't fallen, I meant you were unlikely to get a mortgage in those circumstances

when house prices are falling or have fallen less people are able to buy or do buy for exactly the same reason that you say Stevie. it happens each and every time...

StevieJ

Graham_Devon wrote: »

I'll be absolutely no worse off than anyone else trying to buy and sell at that point in time though. Which is why, as I'm in no rush, I'm saving up what I can to bring my LTV down on the next house.

Considering not many will be able to get mortgages in the examples you are using (house shaving fallen 50%), I don't see why you are so concerned about myself and highlighting my circumstances on the forum?

You were previously predicting house price falls of 50% and suggesting it would be beneficial for you, I am merely suggesting it wouldn't necessarily be a positive, anyway I hope it all works out for you and your son.