Home Equity increases by 2.7% in 2011

DervProf

space_hopper wrote: »

what a disgrace this thread is. This is a vested interests thread, nothing more, nothing less

Be very very aware people. It's not the EA's or sellers holding all the keys at the moment. There's a very good reason banks are valuing homes at well under the asking prices.

Banks for once are playing a responsible game. I fully agree with Graham above. Stop attempting to inflate another bubble that YOU and I, and YOUR KIDS will have to pay for in the future.


It's simply disgraceful that people are attempting to talk up the market when so many families are simply unable to house their kids in decent homes.
The banking industry need to seriously limit the number of mortgages it's offers in the future, NO MORE IRRESPONSIBLE LENDING PLEASE!

Whoa there !

You raise some interesting points, which are likely to raise some strong replies.

I'm sure there will be those who that say that the banks are acting irresponsibly, by not makig enough funds available to boost the property market. I actually can see this as a valid point, but I'll say that those that want increased lending now would almost certainly have not agreed with any lending restrictions during the lead up tot the credit crunch. It's like some people want their cake, and a bit of other people's cake, and eat it.

Getting hooked on easy credit was always going to be a hard habit to break. A little more control over lending 7 years ago, and the banks would have to be so "responsible" as they are being at the moment. Of course, less lending 7 years ago would have restricted HPI, and that would have been a terrible price to pay .

BTW. I do agree with your statement "Stop attempting to inflate another bubble". I doubt we are anywhere near a "bubble", but I suspect that given time, this lesson we are having will not be learned.

Graham_Devon

I actually heard a good comment today. From someone with no real interest in housing. Not even sure how the topic came up, think my sister was being discussed as she can't get a home, has no chance.

The bloke believed one reason the banks are not lending out too much money is to restrict proceedings and therefore supply, therefore keeping prices high and their books in a better position. Not sure how much there is in that, but it certainly sounded interesting.

ukcarper

So are you saying that if lending increased prices would fall I'm not sure about that

Graham_Devon

ukcarper wrote: »

So are you saying that if lending increased prices would fall I'm not sure about that

I'm not sure either.

But certainly we hear all about restricted supply keeping prices up by those with an interest in prices staying high. So why shouldn't it apply in some way? It simply doesnt fit the mould of whats being said so easy to write off.

Theres a key difference between increased sensible lending, i.e lending more money at sensible LTVs, at sensible income ratios and just increased looser lending.

DervProf

Graham_Devon wrote: »

The bloke believed one reason the banks are not lending out too much money is to restrict proceedings and therefore supply, therefore keeping prices high and their books in a better position. Not sure how much there is in that, but it certainly sounded interesting.

The only problem with that theory is that if the banks were to lend out more money, prices would almost certainly rise, still keeping their books in a "better position". Although, I suppose, that "better position" is now known to be not quite so good, as we witnessed 4 years ago.

The banks are recapitalising, that's for sure. We'll have to wait and see what happens when things "get back to normal". I hope that things don't go back the the way they were a few years ago. I hope that tighter control over lending is maintained. You can't keep spending more of tomorrow's wages today, unless you accept the fact that one day it will all go pear shaped.

Pimperne1

Graham_Devon wrote: »

All this "people can simply sell up to pay the mortgage off" is missing the point, by a wide margin.

These are peoples homes we are talking about. I've seen it for myself, it can cause a lot of heartache and displacement. Often, as my parents found out, you can't just sell up and buy somewhere else locally. No one is going to give you a mortgage at that age, and you couldn't afford to pay off the measly (in comparison to todays prices) sum you still owed....the point being, you can't afford a house in that area.

Therefore, its not just the house that you are having to sell and move from. It's often the locality. Friends. Maybe relatives. Maybe children / parents.

Theres a lot of confusion between business / investment homes and real family homes on this thread. I believe we are talking about family homes here, not business investments. For business investments, IO will always be ok. It's a completely different ballgame.

I don't think so. People who take out an IO are stupid if they don't consider that they may have to downsize at the end of the term. In truth though I don't expect many of them do need to as they will often overpay their mortgage or save up enough to pay off the outstanding sum (don't forget their mortgage should be a relative pittance compared to rent for around 15 of the 25 years). If they bought the average house 25 years ago then their mortgage would be around £30k, I reckon the difference between the mortgage and the average rent would be in excess of the £3k they needed to save each year over their final 10 years.

Anyway, if they don't plan ahead they don't deserve my sympathy or yours.

Graham_Devon

"They will often overpay the mortgage".

BOE mortgage figures don't suggest so. Seems this is just you saying they do, rather than an evidencial quote.

"Stupid if they don't consider they may have to downsize or move".

Yet all we have heard on this thread is how wonderful HPI is and a load of hindsight analogies about how it will be OK because they will have HPI and can sell. No mention of what they then live in.

"If they bought the average house 25 years ago.."

Most won't get to 24 years, 1 month and realise they have to pay up, as you state yourself. They can get to 10 years, and think "erm, how we gonna do this".

"If they plan ahead"

Yes, that's fine. But the very point we are discussing is that plans don't always work out. Many planned to switch mortgages to repayment, but how many will, now that mortgages are now harder to get? How many will have the LTV requirements of today and the next few years? How many will, today, have seen sufficient wage increases, at a time of general wage stagnation to simply switch over to practically doubling their monthly outgoing?

It doesn't take much thought to come across a barrage of issues. Many seem to eager to don their heavily rose tinted eyewear and assume everyone has a plan. The evidence against this is continually ignored. For most situations you don't even need evidence. Just look around yourself and ask how many will really have the funds, the LTV, the wage increases etc to simply switch to repayment, or save up?

Pimperne1

Well lets put it this way, if I didn't own a house I would spend a long time worrying about whether I had put away enough to keep paying rent during my dotage. For someone who had lived in a cheap property for the majority of the time they had owned it not to consider how they were going to pay off the relatively small amount they would owe would be stupid. Say the average mortgage ended at age 55 then I would expect them to live at lease another 20 years - if they had to find £30k in order to remain living rent free that would be the equivalent of £125 per month compared to the average rent of £650 (or so) and increasing with inflation.

Kennyboy66

RenovationMan wrote: »

Oh dear, and we were doing so well without the 'bull'/'bear' name calling rhetoric. I guess when you're on the back foot in a discussion, it's a convenient fallback.

Ho hum, that was an interesting debate for a while.

It not a debate though is it ?

You have a closed mind and no matter what evidence people put forward, it will be out of date/too small a sample/not reflecting current events.

It is monumental bores like yourself that has resulted in the more interesting and informative posters giving up.

Emy1501

JonnyBravo wrote: »

Ermmm no.
No. NO. NO.

They were given the term of their mortgage to pay off their mortgage.They weren't given 4 weeks to find the capital, they were given (probably) 25 years.

The fact they realised they had no money 4 weeks from the end means they must have MEW'ed galore for the last 25 years.

You can't protect the stupid from themselves for every eventuality.

They had more than enough money to pay off the mortgage and paid it off with no problem.

The point is the people I know who have taken out IO mortgages for home purchases seem to believe that an IO mortgage lasts for ever until they sell up or die. Therefore there are going to be those in 20-25 years who find that they are forced to sell their house to pay back the bank unless they get their act together soon.

Who knows but their is potential problem over the next 15-30 years and this could coincide with those who see their house as a pension. In the same period as these people will need people to sell to and unless treble or quadruple income comes about I can't see how the next generation are going to keep the pyramid scheme returning up to 10% a years when wage increases are struggling at about 2% and are unlikely to improve much over the next few years.