Halifax -0.4%.... £159,486

ukcarper

I’d say that so long as the fall does not exceed the amount of capital you pay off of the mortgage a fall would make it easier to trade up.

zagfles

ukcarper wrote: »

I’d say that so long as the fall does not exceed the amount of capital you pay off of the mortgage a fall would make it easier to trade up.

Yup pretty much, although it would depend on original deposit. Not everyone buys with the minimum deposit.

Eellogofusciouhipoppokunu

mcc100 wrote: »

Don't forget BTL'ers.

Well they make money on the rental on their existing properties which helps to offset any equity losses, plus lower house prices helps them to buy more BTLs (providing they're not MEWing in order to do it).

Eellogofusciouhipoppokunu

chewmylegoff wrote: »

Unless I am very much mistaken it was you who suggested that falling prices help people to climb the ladder, which was the specific point I was taking issue with.

Well, they do. As I proved.

ukcarper

zagfles wrote: »

Yup pretty much, although it would depend on original deposit. Not everyone buys with the minimum deposit.

Yes that’s true I suppose the problem is that the minimum deposit is now higher than it has been for a long time.

chewmylegoff

zagfles wrote: »

It's a fall from current levels, even if it's a rise from the original value. Therefore it is an example of falling prices helping people move upmarket, which you "took issue" with.

It would be even better had the fall completely wiped out the previous rise as then only a £130k mortgage would be required.

And for those who are actually capable of saving for a deposit rather than relying on HPI to create them one (some people really are you know), eg someone putting away £6k a year for 15 years would have paid off their £90k mortgage on their £100k house, then the bigger the fall in house prices the better, even way below the original price.

it's not though is it, it is an example of someone experiencing HPI of 25% between buying and selling the house. depending on market conditions at the time they might only be in a position to reach the next rung on the ladder because of that extra £25k they have in equity as a result of HPI.*

but anyway, my point wasn't really to become a cheerleader for HPI and to say that HPI helps you climb the ladder, merely to point out that the price of your house falling doesn't put you in a better position vis a vis climbing the ladder. seems to me that "real terms" falls would be helpful (effective real terms falls that is i.e. nominal increases at a rate below the level of your own wage inflation) but having your equity eroded is not going to catapult you up the ladder.


* = if we look at where they would have been with 0% HPI they would be looking to trade up from £100k to £160k with a £70k outstanding mortgage so they would need a £130k mortgage to do so and would have a £30k deposit, or 18.75%.

with 25% HPI, as in your example, they need to pay £200k for the next house, so they will need to borrow £145k instead. however, they will have a £55k deposit or 27.5% deposit.

had prices fallen between buying and selling then their deposit would be much smaller.

furthermore in your example, which is still net HPI whatever you want to call it, if prices fell 50% from peak you can forget buying anything with even a 27.5% deposit...

chewmylegoff

Eellogofusciouhipoppokunu wrote: »

Well, they do. As I proved.

of course you did darling.

Eellogofusciouhipoppokunu

chewmylegoff wrote: »

of course you did darling.

Glad you're coming around to the thought that a £75k mortgage is more desirable than a £250k mortgage. It's not rocket science but main thing is that you got there in the end. Kudos to you for admitting as much on an internet forum.

zagfles

chewmylegoff wrote: »

it's not though is it, it is an example of someone experiencing HPI of 25% between buying and selling the house. depending on market conditions at the time they might only be in a position to reach the next rung on the ladder because of that extra £25k they have in equity as a result of HPI.*

but anyway, my point wasn't really to become a cheerleader for HPI and to say that HPI helps you climb the ladder, merely to point out that the price of your house falling doesn't put you in a better position vis a vis climbing the ladder. seems to me that "real terms" falls would be helpful (effective real terms falls that is i.e. nominal increases at a rate below the level of your own wage inflation) but having your equity eroded is not going to catapult you up the ladder.


* = if we look at where they would have been with 0% HPI they would be looking to trade up from £100k to £160k with a £70k outstanding mortgage so they would need a £130k mortgage to do so and would have a £30k deposit, or 18.75%.

with 25% HPI, as in your example, they need to pay £200k for the next house, so they will need to borrow £145k instead. however, they will have a £55k deposit or 27.5% deposit.

had prices fallen between buying and selling then their deposit would be much smaller.

furthermore in your example, which is still net HPI whatever you want to call it, if prices fell 50% from peak you can forget buying anything with even a 27.5% deposit...

You seem to be assuming that over 15 years, with falling mortgage rates, they haven't been capable of saving anything/paying down their mortgage at all.

You also seem to think banks are stupid enough to want a higher deposit % after a crash rather than before.

Mind you, I'll give you the second one. Banks probably are that stupid. Just like the numpties who bought at the peak thinking prices can only rise...

chewmylegoff

zagfles wrote: »

You seem to be assuming that over 15 years, with falling mortgage rates, they haven't been capable of saving anything/paying down their mortgage at all.

You also seem to think banks are stupid enough to want a higher deposit % after a crash rather than before.

Mind you, I'll give you the second one. Banks probably are that stupid. Just like the numpties who bought at the peak thinking prices can only rise...

Well the outstanding mortgage of £70k was your figure not mine so I'm just using your assumption. Even if they have saved money I don't see how losing a chunk of their original equity makes it easier to climb the ladder than if e.g. Prices stayed the same.

When prices of something have fallen 50% you are catching a falling knife by buying - banks are obviously going to want to protect themselves (the present moment being a good example when we h e flat house prices and large deposit requirements despite it looking like most of the falls that are going to happen have already happened).