The homeowners who cannot move home

homelessskilledworker

http://www.bbc.co.uk/news/business-19372268


A report warns that millions of mortgage holders are effectively trapped in their homes because their deposits, or savings, have disappeared.

Falling house prices over the last five years have meant dramatic reductions in the amount of equity that homeowners possess.

System

These people are the reason house prices are staying high, no point selling if you then can't affford to buy somewhere to live afterwards.

homelessskilledworker

Joeskeppi wrote: »

These people are the reason house prices are staying high, no point selling if you then can't affford to buy somewhere to live afterwards.

Mmmm yep ok, The freedom of home ownership.

Loughton_Monkey

Helen Ryan, who works for the police, was one such buyer.

She put £16,000 down as a deposit, and assumed that her equity would grow, as house values increased.

But in fact the value of her two-bedroom flat has fallen by around 15%.

She and her fianc! want to move out and start a family, and that is proving extremely difficult.

So....

1. Precarious financial situation.
2. Want to start a family.

I suggest that they shouldn't have spent so much on the lobotomy.....

ukcarper

Looking at land reg the total number of transactions per month between beginning of 2005 and beginning of 2009 went from a max of 124,000 to a minimum of 26,000 even if it averaged out to 75,000 a month it would actually be a lot less there have would been 3.6 million transactions so I think that to say millions are trapped is a bit of an exaggeration.

Thrugelmir

homelessskilledworker wrote: »

Falling house prices over the last five years have meant dramatic reductions in the amount of equity that homeowners possess.

May have something to do with the fact that around 43% of borrowers have interest only mortgages. HPI and a larger mortgage alone isn't enough to move up the ladder. People need to realise that they actually have to save money to afford a bigger property.

Loughton_Monkey

ukcarper wrote: »

Looking at land reg the total number of transactions per month between beginning of 2005 and beginning of 2009 went from a max of 124,000 to a minimum of 26,000 even if it averaged out to 75,000 a month it would actually be a lot less there have would been 3.6 million transactions so I think that to say millions are trapped is a bit of an exaggeration.

Well spotted.

This one smells like rotten fish to me!

First of all, this so-called 'report' was issued by Lloyds TSB as long ago as February 25th 2012. So why are BBC regurgitating it now?

http://www.lloydsbankinggroup.com/media/pdfs/LTSB/2012/2502_Second.pdf

Secondly, nowhere in the report does it mention "Millions". It simply refers to various percentages of 'second steppers' [first time sellers] and is based upon survey rather than hard data.

So what we have here, I suspect, is yet another typical symptom of the BBC's absolutely appalling standards of financial journalism. It is probably the work of some ill-educated sub-editor who is being harangued to pad things out during the 'silly season' and finds that (a) he/she is in this situation him/herself, and/or (b) has a brother-in-law in this situation, and just wants to get some sympathy.

Memo to BBC:

For God's sake, and for the sake of long suffering license payers, please (a) Drop so-called Investagative Journalism of any kind, (b) Restrict financial journalism to simple reporting of FTSE movements, and (c) Stick to entertainment.

I am waiting for the day that these muppets wake up and learn that there is no such place as "Bombay", and that the Stock Exchange is located in "Mumbai". The change was in 1995, so there are clearly 17 year old cobwebs in some parts of the BBC. I wouldn't mind, but I'm paying for all this.

HAMISH_MCTAVISH

Thrugelmir wrote: »

May have something to do with the fact that around 43% of borrowers have interest only mortgages. .

Wrong again.

It's more like 35%, but many of those have repayment vehicles.

The number without a structured repayment vehicle is estimated at more like 20%.

Or less than half your false claim.

Loughton_Monkey

HAMISH_MCTAVISH wrote: »

....It's more like 35%, but many of those have repayment vehicles.....

Don't doubt your figures for one minute, Hamish.

I just like your use of the term "Structured Repayment Vehicle", which is a rather posh term for what used to be [generally speaking] endowment policies.

Over my own house buying life, I managed to accrue a total of 11 SRV's [endowment policies]. With just one exception, these paid out massively more than the amount intended to repay. But I am proud of the fact that I didn't waste one penny of any endowment policy on repaying the mortgage.

I found it far better to spend the money on more luxurious things, and a few home improvements, and tended to let the mortgage inflate away, until I could pay it off from 'petty cash'.

This worked wonderfully, until interest rates went belly up, at which point I was able to take the [fully offset] mortgage amount out and pay 1½% interest while earning 4% on the same money.

Over 40 years, I worked out an average return on home investment [including every penny spent on home improvements] of just over 7% net. The return on the endowment policies [some of which, admittedly, got LAPR] was even better at around 11%.

But you try telling the youngsters of today to invest in a house......

homelessskilledworker

I know I am going to get attacked for this, buy hey ho here goes anyway:)
People on this board seem to have forgotton very quickly those pre 2007 days when you could load up with as much debt as you could stuff in those boots. I have to admit it now feels like a distant memory when the only obstacle to borrowing whatever you wanted was Mmmmm...Well!! there was no obstacle.

All you needed was a property and away you went, borrow like there was no tommorrow, and "millions" did, and why would it be a surpise to anyone, you only have to look at how much the banks screwed up with their poor lending to realise this.
Some on this board are calculating on the basis that only those around 2005 onwards could be stuck as that is where nominal house prices are today, rubbish. There are plenty of homeowners from even way before 2000 who started the now long forgotton art of MEW, mortgage equity withdrawl.

I have no problems with the article claiming millions are stuck, I am not saying it is 100%, but it is more than feasible.

moneyinmypocket

Even if millions can't afford to move doesn't mean they can't afford to stay put. All this does causes is a static market