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The timebomb under Britain’s property market

Bigdeflationfirst
Bigdeflationfirst Posts: 122 Forumite
in Debate House Prices & the Economy
http://www.moneyweek.com/investments/property/uk/the-timebomb-under-britains-property-market-21500

So the people who took out interest-only loans at the top of the market are in real trouble. They couldn’t afford the home in the first place. That’s why they went for interest-only. Now it’s probably worth less than they paid for it.

Meanwhile, home loan costs are ticking higher, and they don’t have enough equity in their homes to qualify for any decent deals. As the Financial Services Authority puts it, they are ‘mortgage prisoners’. So one way or another, they are facing rising monthly payments.

For all that banks and lenders make comforting noises and say that they’re alert to the needs of their customers, the fact is that they’ll offload as many troubled borrowers as their balance sheets will allow. And that could lead to a further slide in prices.

This threat of another drop in house prices is one reason why I’m still very wary of the banking sector, particularly our state-owned banks, Lloyds and RBS. As for the property market – buying a property to live in is a personal decision, and about more than just money. But if you’re looking to invest, we think the US is a better bet just now.
Big deflation your debts are going up against everything else. I would not like to be a property owner with a big mortgage right now, pay off your debts ASAP!

Comments

  • BlythMastrs
    BlythMastrs Posts: 4 Newbie
    Bigdeflationfirst wrote: »
    So the people who took out interest-only loans at the top of the market are in real trouble. They couldn’t afford the home in the first place. That’s why they went for interest-only. Now it’s probably worth less than they paid for it.

    Meanwhile, home loan costs are ticking higher, and they don’t have enough equity in their homes to qualify for any decent deals. As the Financial Services Authority puts it, they are ‘mortgage prisoners’. So one way or another, they are facing rising monthly payments.

    For all that banks and lenders make comforting noises and say that they’re alert to the needs of their customers, the fact is that they’ll offload as many troubled borrowers as their balance sheets will allow. And that could lead to a further slide in prices.

    This threat of another drop in house prices is one reason why I’m still very wary of the banking sector, particularly our state-owned banks, Lloyds and RBS. As for the property market – buying a property to live in is a personal decision, and about more than just money. But if you’re looking to invest, we think the US is a better bet just now.

    The thing about a timebomb is the longer it goes on the nearer the end will be.

    They have nothing left to defuse this bomb this time.
  • FTBFun
    FTBFun Posts: 4,273 Forumite
    Silver sockies thanking silver sockies. Lovely.
  • nearlynew
    nearlynew Posts: 3,800 Forumite
    I'm sure everything will be OK

    After all, if they were financially savvy enough to get an IO mortgage they will be able to sort themselves out.
    "The problem with quotes on the internet is that you never know whether they are genuine or not" -
    Albert Einstein
  • chucknorris
    chucknorris Posts: 10,795 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    How many more times is this article going to be dragged up?
    Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop
  • wotsthat
    wotsthat Posts: 11,325 Forumite
    BlythMastrs wrote: »
    They have nothing left to defuse this bomb this time.

    Time and inflation.

    Plus when the 2006/07 IO mob need to pay off their mortgages they'll be able to have a root around, sell a silver teaspoon and silver sixpence, and be able to pay off the loan and maybe have a nice holiday too with what's left over.
  • CRASH_BANG_WALLOP
    CRASH_BANG_WALLOP Posts: 661 Forumite
    FTBFun wrote: »
    Silver sockies thanking silver sockies. Lovely.

    someone does not like the article so brings up silver
    Maidstone Prices - average reductions at 8.5% (£19,668) Feb 2012 - We thought the dudes were not allowed to drop prices?
  • BlythMastrs
    BlythMastrs Posts: 4 Newbie
    nearlynew wrote: »
    I'm sure everything will be OK

    After all, if they were financially savvy enough to get an IO mortgage they will be able to sort themselves out.


    Ha at this time of cheap easy credit almost anyone with a pulse could get a mortgage, that was what caused the property bubble.
  • Mr._Pricklepants
    Mr._Pricklepants Posts: 1,311 Forumite
    Darthvader wrote: »
    Can we get an answer from one of the team pretty please?

    You got your answer in the sticky in the investment section
    Please don't post these on the forum in future. There are investment forums available that are much more appropriate for this kind of post.
    If users continue to post on the subject, whether directly or trying to circumvent it by using other terms, the Forum Team will unfortunately have to take further steps.

    Post reported.
  • wotsthat
    wotsthat Posts: 11,325 Forumite
    Darthvader wrote: »
    Now silver has put in a solid base at around £20 per ounce getting ready for the next leg up.

    Yeah solid.

    chart?chart_primary_ticker=LSE:SLVR-COM&chart_time_period=12_month&canvas_colour=000000&primary_chart_colour=CC0000&use_transparency=0&plot_colour=ffffff&cp_line_colour=1F4F82&margin_left=35&margin_bottom=20&margin_right=20&time_24hr=1&tiny_chart=1&tiny_month_view=1&logo_strength=light&y_axis_left=1&x_axis_plain=1&cp_line=1&cp_line_style=dotline&charting_freq=1_minute&co_dimension^width=629&co_dimension^height=190
  • Darthvader
    Darthvader Posts: 95 Forumite
    wotsthat wrote: »
    Yeah solid.

    chart?chart_primary_ticker=LSE:SLVR-COM&chart_time_period=12_month&canvas_colour=000000&primary_chart_colour=CC0000&use_transparency=0&plot_colour=ffffff&cp_line_colour=1F4F82&margin_left=35&margin_bottom=20&margin_right=20&time_24hr=1&tiny_chart=1&tiny_month_view=1&logo_strength=light&y_axis_left=1&x_axis_plain=1&cp_line=1&cp_line_style=dotline&charting_freq=1_minute&co_dimension^width=629&co_dimension^height=190


    Yep you got it, a solid base.
This discussion has been closed.
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