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

Melissa177

dolce_vita wrote: »

The only reason your friends are using IO mortgages is because house prices are so high this is the only way they can afford the repayments.

And yes, in a fast rising market you can rely on HPI to allow you pay off your mortgage, sell on and start again.

But there comes a point where you have to pay back what you owe.

Not strictly true. I'm on IO. I could afford repayment, but I choose to put the difference in an account which is earning a higher interest than the debt of my mortgage.

I do this because:
- If I have an unexpected expense, I can cover it without worrying about defaulting on my mortgage by not adding to my savings pot that month.
- I am earning more money in interest
- I'm not planning in staying in my flat for very long - I'll be out of here in a year or two, I'm doing it up and moving to somewhere else.


I'm sure plenty of people have done the same calc as me.

PasturesNew

I've recently come across somebody up to her neck in it.
I found out she owed £180k on her mortgage. She and her husband work and ... after a few days I was told she earns £16k and her husband £22k. So, that's £38k owing £180k.

They can't be overly unusual - but that's about 4.75x joint salary.

So, what lovely house do they live in? A 3-bed semi on one of the grottier council estates.... I saw her house, I asked "so how much is it worth?" not believing it could be worth all that much. £180k she said. I nearly choked!

She's borrowed money against the house to do it up, to buy a new car, to go on holidays, to spend, spend, spend.

She's on the verge of bankruptcy is the general opinion.

So it won't take much to change her fortunes. Her and how many hundreds, thousands of others?

People go about their daily lives not realising just how much debt people have stacked up.

I've no idea how her mortgage(s) stack up. But they won't be all that cleverly organised I doubt.... and her house of cards could come down simply by another small IR increase ... and what if she's one of those who has a fixed rate ending later this year?

People have no idea just how precariously the lives of others are balanced.

If she's turfed out - or tries to hang on kicking and screaming - there's one house that will go to whoever on the day bids the highest amount.

Now, what if there is only one person like this per estate, per small village, per locality? It all adds up.

P.S. Is she taking this seriously? Is she heck! She's off on another holiday shortly.

meme_3

pinkshoes wrote: »

The only people that swear there will be a market crash are those that don't own a property, but if there is a property owner out there who thinks their property is going to drop 30% in price, please correct me.

Please stand corrected!!
I am a property owner - saw the last price crash due to excessive lending and/or debt.
Yes mortgage rate was about 10-15% at the time, but they would only let you borrow 2.5 times a joint income
That was provided that you didn't have any credit cards, loans etc - or it would have been even less.

dolce_vita

And corrected again

Melissa177

PasturesNew wrote: »

I've recently come across somebody up to her neck in it.
I found out she owed £180k on her mortgage. She and her husband work and ... after a few days I was told she earns £16k and her husband £22k. So, that's £38k owing £180k.

They can't be overly unusual - but that's about 4.75x joint salary.

So, what lovely house do they live in? A 3-bed semi on one of the grottier council estates.... I saw her house, I asked "so how much is it worth?" not believing it could be worth all that much. £180k she said. I nearly choked!

She's borrowed money against the house to do it up, to buy a new car, to go on holidays, to spend, spend, spend.

She's on the verge of bankruptcy is the general opinion.

So it won't take much to change her fortunes. Her and how many hundreds, thousands of others?

People go about their daily lives not realising just how much debt people have stacked up.

I've no idea how her mortgage(s) stack up. But they won't be all that cleverly organised I doubt.... and her house of cards could come down simply by another small IR increase ... and what if she's one of those who has a fixed rate ending later this year?

People have no idea just how precariously the lives of others are balanced.

If she's turfed out - or tries to hang on kicking and screaming - there's one house that will go to whoever on the day bids the highest amount.

Now, what if there is only one person like this per estate, per small village, per locality? It all adds up.

P.S. Is she taking this seriously? Is she heck! She's off on another holiday shortly.

People who borrow against the equity rise in their property for depreceating items like holidays and cars are just asking for trouble, in my opinion.

Her bankruptcy won't be the fault of a HPC - it will because of her own foolishness.

CYBERCIDERSAVER

Melissa177 wrote: »

Where do the people living in rented accommodation then live when their landlords sell up? There's your demand - they want somewhere to buy/rent too.

They move to one of the many other properties that are up for rent.

Everywhere is different, but in my local area nearly all the estate agents now have a letting agency all with loads of empty properties. Whereas 5 years ago there was just one agent doing this.

When I last moved you were lucky to find 10 properties for rent in the local paper. This weeks? 65

Add to this the new estate being built which will add 1500+ homes to a town with a population of 36 000

And don't forget the proportion of renters who will buy given the chance. I know many such people, including numerous Eastern European migrants who don't plan on staying here very long yet still would rather buy.

What surprises me (and makes me think BTLers are getting scared) is the number of properties for sale with tenants. The smart people are geetting out of BTLs.

franklee

CYBERCIDERSAVER wrote: »

They move to one of the many other properties that are up for rent.

That's right but I think will be a lot of churn.

The tenant will leave or be asked to leave as the landlord plans to sell up. So that's one less property on the rental market. But when it doesn't sell, or the sale falls through, it will come up for rent again.

Then there will be homeowners who have to move but can't sell, they will put the old place up for rent.

Not everyone will be doing all this at the same time so whilst properties will come and go from the rental market I expect the actual numbers to remain or even grow.

CYBERCIDERSAVER wrote: »

What surprises me (and makes me think BTLers are getting scared) is the number of properties for sale with tenants. The smart people are geetting out of BTLs.

The smart money has been leaving for some time IMO.

What is frightening is those landlords who cannot afford to sell. Either they don't have enough cash to pay the capital gains tax due to remortgaging any equity out for a deposit for the next purchase. Or they do not have enough cash to maintain mortgage payments while the property is sold if the sale means the tenant leaves.

Even worse are landlords who rely on the rent to pay the mortgage and get landed with a tenant who doesn't pay. By the time the tenant is evicted the property may well have been repossessed!

It ain't going to be pretty.

Leigh_Bush

Predictions for the UK housing market

phlash

Leigh_Bush wrote: »

Predictions for the UK housing market

Thanks BRUNO, I left a nice public comment for you on your YOUTUBE account. Enjoy.

http://www.youtube.com/user/brunopowroznik

Melissa177

Seriously, how many STRs are there out there?

I know of no-one who has sold their house to rent instead.