The worst property bubble?

Wookster

Headlines:
1 in 4 homes in negative equity forecast in Summer 2013
Borrowing up to 12x income

No, its not somewhere in Southern Europe but in Holland!

Full article here: http://www.reuters.com/article/2012/08/20/dutch-property-crisis-idUSL6E8JGBS920120820

If housing prices fall another 10 percent, the central bank projected last year, 30 percent of all mortgages would no longer be covered by the home value. That would lead to losses at the four Dutch commercial banks, where about one third of lending comes from mortgages and which are already reporting rising mortgage delinquency.

MacMickster

The Dutch used excess value to move to larger homes or as consumer credit. The cash bought new kitchens and bathrooms, cars, luxury holidays and recreational boats. Interest on mortgages remains tax deductible. In half of all mortgages, repayment of the principal is deferred for up to 30 years.

So it seems that reckless lending encouraged people to use HPI as a piggybank, and that many risky loans were made on an interest only basis. Who would have thought it eh?

Don't worry. Someone will be along soon to advise the Dutch that all they need to do is restore those previous lending practices and encourage further HPI, then all will suddenly be well with the world and their economy.

FTBFun

Tax deductible mortgage interest.......hmmmm.

mystic_trev

There is a reason why many of the Dutch have such large mortgages. In the Netherlands there is a Wealth Tax. There's no point in owning Property there when you can offset the Interest against Tax, which is what many people do. This isn't a new thing it's been happening for years.

michaels

My lil bro who is working in the Hague made a cryptic comment about the state of the Dutch banks at the weekend, all maks sense now.

Wookster

michaels wrote: »

My lil bro who is working in the Hague made a cryptic comment about the state of the Dutch banks at the weekend, all maks sense now.

Dutch banks are bust from the Dutch property market.

German & French banks are bust from Spanish & Portugese & Greek debt, not to mention the Central bank Target2 liabilities.

They don't use tanks and bombs, just weapons of mass financial destruction now.

Pobby

Always a warming experience to see responsible, 12 x income lending on a property. Of course it must be affordable. :rotfl: