'We've reached a tipping point' Signs of house price weakness

chucknorris

Blooloo wrote: »

Yes, I was thinking of a BTL guy, but yes, MEW(HEW) was a major factor of the BOOM up to 2008, and people encouraged by moneylenders to "monetise" their new found wealth...houses only ever going up of course and repayment a doddle when they cash out.

I would expect (barring huge disasters like tsunamis, earthquakes or an invasion in a land war or being bombed) that (in the long run) houses will always go up (nominally, not necessarily in real terms) but that they are also obviously subject to periodical corrections reflecting the cyclical nature of both the economy and the housing market. So if you over extend yourself and make yourself potentially vulnerable to possible forced sales during these corrections, then you can lose out. So the lesson is, don't over extend yourself, or at least be aware of the risks that you are taking and accept the potential consequences.

Blooloo

chucknorris wrote: »

I would expect (barring huge disasters like tsunamis, earthquakes or an invasion in a land war or being bombed) that (in the long run) houses will always go up (nominally, not necessarily in real terms) but that they are also obviously subject to periodical corrections reflecting the cyclical nature of both the economy and the housing market. So if you over extend yourself and make yourself potentially vulnerable to possible forced sales during these corrections, then you can lose out. So the lesson is, don't over extend yourself, or at least be aware of the risks that you are taking and accept the potential consequences.

whilst this is the right attitude, Im afraid lenders sales and marketing teams dont offer the same advice...indeed, they have been forced by the regulator ( 14 years too late) to consider their shareholders, their customers and their creditors when making loan decisions...and even now they appear to be paying lip service to MMR.

IMHO, the regulator should be watching very closely MMR transacted mortgages from the outset and slapping very hard the lender who pushed the envelope...at the moment, nobody knows how far they can push, and if a "light touch" is reapplied then we all know that is as good as a green light for commissions and criminal lending multiples. LIAR loans are not just the person signing the mortgage contract.

wotsthat

Blooloo wrote: »

whilst this is the right attitude, Im afraid lenders sales and marketing teams dont offer the same advice...indeed, they have been forced by the regulator ( 14 years too late) to consider their shareholders, their customers and their creditors when making loan decisions...and even now they appear to be paying lip service to MMR.

IMHO, the regulator should be watching very closely MMR transacted mortgages from the outset and slapping very hard the lender who pushed the envelope...at the moment, nobody knows how far they can push, and if a "light touch" is reapplied then we all know that is as good as a green light for commissions and criminal lending multiples. LIAR loans are not just the person signing the mortgage contract.

You do have a very strong anti lending bias - you don't like people taking a leveraged position full stop.

Until mortgage lending dramatically falls you're going to be making these assertions for the rest of your life whatever the truth of the matter.

chucknorris

Blooloo wrote: »

whilst this is the right attitude, Im afraid lenders sales and marketing teams dont offer the same advice...indeed, they have been forced by the regulator ( 14 years too late) to consider their shareholders, their customers and their creditors when making loan decisions...and even now they appear to be paying lip service to MMR.

IMHO, the regulator should be watching very closely MMR transacted mortgages from the outset and slapping very hard the lender who pushed the envelope...at the moment, nobody knows how far they can push, and if a "light touch" is reapplied then we all know that is as good as a green light for commissions and criminal lending multiples. LIAR loans are not just the person signing the mortgage contract.

I forgot to add that I don't think there is anything wrong with taking on risk, as long as you understand what you the upside and downside are, and the consequences that you are potentially letting yourself in for. When I was in my early to mid 30's I was much more open to taking risks, but I am now in a much different position in my life, and I am not prepared to take on anywhere near the risk that I did almost 25 years ago.

Bantex_2

chucknorris wrote: »

I forgot to add that I don't think there is anything wrong with taking on risk, as long as you understand what you the upside and downside are, and the consequences that you are potentially letting yourself in for. When I was in my early to mid 30's I was much more open to taking risks, but I am now in a much different position in my life, and I am not prepared to take on anywhere near the risk that I did almost 25 years ago.

You have said you have more than you could ever spend. Seems you have nothing to lose by taking risks.

chucknorris

Bantex wrote: »

You have said you have more than you could ever spend. Seems you have nothing to lose by taking risks.

But also nothing to gain, think about it, if I might struggle to spend what I already have, what is the point in taking on more risk (and stress) only to gain something that I probably can never spend.


I'll certainly give it a go at spending what we have! I'm not totally risk averse, for example I have/am moving away from cash in favour of shares, but that's about it these days.

Bantex_2

chucknorris wrote: »

But also nothing to gain, think about it, if I might struggle to spend what I already have, what is the point in taking on more risk (and stress) only to gain something that I probably can never spend.


I'll certainly give it a go at spending what we have! I'm not totally risk averse, for example I have/am moving away from cash in favour of shares, but that's about it these days.

Would I be right in assuming it is more of a pastime than anything to do with lifestyle etc?

chucknorris

Bantex wrote: »

Would I be right in assuming it is more of a pastime than anything to do with lifestyle etc?

Do you mean moving my money from cash to shares? I can't help myself, it is natural for me to work out what is the best value (for me). It is just my nature to do that, in pure financial terms, I think that buying a property would be better value but that would mean a lot more effort and hassle than buying some shares (which would be tend to be passive rather than active investment), so overall considering also my lifestyle, the value personally for me, is in shares. I just can't quite force myself to stay in cash and lock in a guaranteed real term loss, it makes me feel like a mug. The market could crash of course, but as I don't need the money I could sit it out and still get more return on dividend income than savings rates. That is probably an over simplification, but that is the gist of how I feel.


You probably think that I am sending mixed messages about risk etc. I probably am, that is because I am trying to change as I approach retirement, and head towards and aim for more pleasure only activities by trying to switch off.

Bantex_2

chucknorris wrote: »

Do you mean moving my money from cash to shares? I can't help myself, it is natural for me to work out what is the best value (for me). It is just my nature to do that, in pure financial terms, I think that buying a property would be better value but that would mean a lot more effort and hassle than buying some shares (which would be tend to be passive rather than active investment), so overall considering also my lifestyle, the value personally for me, is in shares. I just can't quite force myself to stay in cash and lock in a guaranteed real term loss, it makes me feel like a mug. The market could crash of course, but as I don't need the money I could sit it out and still get more return on dividend income than savings rates. That is probably an over simplification, but that is the gist of how I feel.


You probably think that I am sending mixed messages about risk etc. I probably am, that is because I am trying to change as I approach retirement, and head towards and aim for more pleasure only activities by trying to switch off.

Thanks.
I find your motivation intersting.
I may be wrong, but get the impression that you have enough that even if you converted the lot into cash next week, it would be more than enough to support your chosen lifestyle until you die.

chucknorris

Bantex wrote: »

Thanks.
I find your motivation intersting.
I may be wrong, but get the impression that you have enough that even if you converted the lot into cash next week, it would be more than enough to support your chosen lifestyle until you die.

I often think that, but thinking and knowing aren't always the same thing, holding cash just doesn't appeal for the reason that I said above. About switching off and retiring, our plan is to spend the winter away in either Spain or the Algarve, and to do that my wife also needs to retire. She has finally started talking about retiring next December, in the meantime I am (almost) happy to carry on working.