how many REALLY think there'll be a crash rather than a stabilisation ?

Snow_Dog

Must be time for another rate cut then;)

UK007BullDog

In the end people will have to live somewhere, so panic selling ones house just because it loses value is a folly, they might be able to rent somewhere cheaper and maybe even pick up a similar property for less than they got at their panic sale. But the panic sales of homeowners only fuelled the crash further. Those shrewd enough who own properties will fix now for a longer term and sit back. People are so obsessed with interest rates going up or down. Its a gamble, so cut your losses and fix longer term and ride it out. If the interest rate drops, too bad but what if it had risen to 10% or more? better safe than sorry.

What happened in the 80's - 90's might not happen as people have learned from that time. The first to dump their properties are the wannabe landlords who have a few properties and are afraid to lose their investments. If the interest rate does not go too high lots of FTB will snap up those properties and fix long term to meet affordability.

Also a lot of professional landlords are remortgaging their present properties to create a war chest of funds to buy up the properties that are going to get dumped by the panic sellers. Some people bought whatever they could lay their hands on in the last crash and are now high and dry to do the same thing again if it happens.

The owner occupiers will just sit tight and hope to weather the storm. If the interest rates go over 6.5% then its time to fix for a longer period and try to put as much money into the mortgage as possible. The less mortgage the better.

Most people forget to have a contingency plan in place in case something like this could happen. The own home is not a cash machine for endless money to fund an uppity lifestyle, its about time people realise not to gamble with the roof over their heads.

Gorgeous_George

I think it's to late to fix.

When IRs are low, people don't see a need to fix. When IRs are higher, many people fix and - eventually - wish they hadn't.

It's a funny old game.

I want a cuckoo clock.



GG

Turnbull2000

I don't quite understand what you're implying Bulldog. Are you saying most people can ride out a crash, or there will be no crash as fixed rates and wealthy landlords will hold the market up?

You make it sound so simple - fix your rate and there's nothing to worry about. Yet those who bought during the boom on two-year fixed rates are in for quite a shock when it comes to finding another deal. New deals on offer could potentially be two percentage points higher for a huge number of people. Repossession numbers are already climbing fast, so the first to dump their properties will not just be the newbie landlords.

Only those who bought before 2002-2003 will probably swallow the extra mortgage expense without much sacrifice. So long as they haven't mewed to the hilt, there's nothing to worry about should prices drop.

budget_counsellor_shaz

UK007BullDog wrote: »

In the end people will have to live somewhere, so panic selling ones house just because it loses value is a folly, they might be able to rent somewhere cheaper and maybe even pick up a similar property for less than they got at their panic sale. But the panic sales of homeowners only fuelled the crash further. Those shrewd enough who own properties will fix now for a longer term and sit back. People are so obsessed with interest rates going up or down. Its a gamble, so cut your losses and fix longer term and ride it out. If the interest rate drops, too bad but what if it had risen to 10% or more? better safe than sorry.

The problem is affordability...... a lady I saw a couple of weeks ago is into negative equity already, as she borrowed against her house (Secured loan). (unfortunately '1st plus' allowed her to borrow more than she was able to pay back......

Shaz

mark55man

this has been a fascinating if sobering read.

if house prices are going to correct what are the strategies for dealing with it - sell & rent??, sit tight and hope??

also how uniform is this going ot be - I have a large family so have a largish house which I moved to in 1997. Are these going to be hit less or hit more than the FTB, BTL type properties most posts refer to

Interested in your views - my hunch is to not too do anything - my 5 year fix mortgage has 18 months to run I think things may have clarified themselves somewhat politically and economocially - of course we may also be predicting a 30% fall from an even higher average :-)

Mark

Guy_Montag

mark88man wrote: »

this has been a fascinating if sobering read.

if house prices are going to correct what are the strategies for dealing with it - sell & rent??, sit tight and hope??

also how uniform is this going ot be - I have a large family so have a largish house which I moved to in 1997. Are these going to be hit less or hit more than the FTB, BTL type properties most posts refer to

Interested in your views - my hunch is to not too do anything - my 5 year fix mortgage has 18 months to run I think things may have clarified themselves somewhat politically and economocially - of course we may also be predicting a 30% fall from an even higher average :-)

Mark

You bought in 1997, before prices tripled, assuming you've not been borrowing against the rising "value" of your house & been paying off the mortgage like a good boy you'll be sitting pretty.

Your mortgage may go up a bit at the end of the five year fix, are you prepared for that?

Romani_Ite_Domum

UK007BullDog wrote: »

Also a lot of professional landlords are remortgaging their present properties to create a war chest of funds to buy up the properties that are going to get dumped by the panic sellers. Some people bought whatever they could lay their hands on in the last crash and are now high and dry to do the same thing again if it happens.

An interesting comment. I take it as you are a mortgage advisor then this is anecdotal? I have heard from LLs on this site that they would buy up properties during a downturn and this in itself would help prop the market up. I have often wondered where the money would come from.

If you had 2 properties with a current market price of £200K each and say £80K of that total was equity. If a lender was prepared to loan 85% LTV BTL then you don't quite have enough as you can only release £20K more in equity from the existing properties as a deposit. If property prices drop by 20% you would have no equity at all and therefore another BTL is out of the question.

However, what you are saying is that LLs are releasing equity now i.e the £20K, putting it in a high interest account (to try to balance the monthly interest) So that when properties drop by 33% the £20K is now enough for a deposit on another similar property with a price of £132K.

The bottom line is that you have LLs out there that are expecting a crash and getting the war chest together now as they will not be able to during the crash. This would be a lot of trouble to go to unless they were expecting a downturn soon.

Bulldog, is this what you are saying. If so is it many doing this or just a few. How do you know that they are no just remortgaging because they are paying off credit cards etc.

Guy_Montag

Romani_Ite_Domum wrote: »

An interesting comment. I take it as you are a mortgage advisor then this is anecdotal? I have heard from LLs on this site that they would buy up properties during a downturn and this in itself would help prop the market up. I have often wondered where the money would come from.

If you had 2 properties with a current market price of £200K each and say £80K of that total was equity. If a lender was prepared to loan 85% LTV BTL then you don't quite have enough as you can only release £20K more in equity from the existing properties as a deposit. If property prices drop by 20% you would have no equity at all and therefore another BTL is out of the question.

However, what you are saying is that LLs are releasing equity now i.e the £20K, putting it in a high interest account (to try to balance the monthly interest) So that when properties drop by 33% the £20K is now enough for a deposit on another similar property with a price of £132K.

The bottom line is that you have LLs out there that are expecting a crash and getting the war chest together now as they will not be able to during the crash. This would be a lot of trouble to go to unless they were expecting a downturn soon.

Bulldog, is this what you are saying. If so is it many doing this or just a few. How do you know that they are no just remortgaging because they are paying off credit cards etc.

As I understand it many BTL landlords are on interest-only mortgages & as I also understand it many interest-only mortgage agreements state that if your equity falls below the LTV ratio agreed, the mortgagee can convert it into a repayment mortgage until such time as the LTV ratio returns to its original level. Perhaps a mortgage adviser could advise.

nelly_2

Wey hey brunos back