The Big short-coming to the UK

Tyler119

Personally I think the housing market in the UK will keep going as it has for sometime now. Demand will continue to out strip supply, thus keeping valuations relatively steady, or indeed rising; depending on what region of the UK you are in.

In my area prices had dipped during the financial armageddon, however they are now higher than almost all previous years. The issue in my area is that outside property developers are only building properties ranging from £260k to £600k. I actually read the housing report that our council had commissioned, a very long 300 pages. The conclusion was that what is required is plenty of affordable housing, mainly in the £100k to £150k price range. The next level of housing should be for those of a significant age range, as in built on ground level only.

I find it amazing that our council is giving the go ahead to project after project that is doing the opposite of what it's own published housing report recommended. Still most of these houses are still empty months and months after being built...perhaps in a few years they will look like the bargain of the decade.

To the OP, I don't imagine that we will have an issue like in the mentioned film. Our property finance system has always worked differently to the states...thank god for that one. It is very tough for people to get a mortgage at present. During the affordability tests, I believe they test applicants finances against interest rates rising to 5% to 7%...which seems a very logical action to take.

At present, the only way I can see some sort of housing mess happening is if there is an event that creates mass unemployment, which leads to mass repossessions which in turn would lead to lower house prices turning a good number of peoples properties into negative equity.

iantojones40

AnotherJoe wrote: »

That would make very little difference at all. So the bank rate would rise to 0.26%. No problem.

I'm sure you knew what I meant... just to clarify, if interest rates went up TO 4 or 5%

But please feel free to award yourself a chufty badge for being such a clever clogs.:T

Bluebirdman_of_Alcathays

Tyler119 wrote: »

At present, the only way I can see some sort of housing mess happening is if there is an event that creates mass unemployment, which leads to mass repossessions which in turn would lead to lower house prices turning a good number of peoples properties into negative equity.

What, like a referendum that threatens the trading deal with our largest trading partner?

Tyler119

Bluebirdman_of_Alcathays wrote: »

What, like a referendum that threatens the trading deal with our largest trading partner?

There is nothing concrete at present to indicate that mass unemployment will happen as a result of Britain exiting the EU.

Bluebirdman_of_Alcathays

Tyler119 wrote: »

There is nothing concrete at present to indicate that mass unemployment will happen as a result of Britain exiting the EU.

So you're allowed to navel gaze but I'm not?

There has been every 10-15 years on average an event that causes mass unemployment. My supposition is just as valid as yours IMHO.

Tyler119

Bluebirdman_of_Alcathays wrote: »

So you're allowed to navel gaze but I'm not?

There has been every 10-15 years on average an event that causes mass unemployment. My supposition is just as valid as yours IMHO.

I never expressed an opinion in regards to your naval gazing...then again I am not too fussed if anyone believes my opinion is valid or not.

It is factual that there is nothing concrete at present to suggest mass unemployment is around the corner. Personally I'm more concerned for the next ten years when automation really gets going. I fear I will have to buy a robot and send it out to work in the fields.

antrobus

C_Mababejive wrote: »

Has anyone else seen the film "The Big Short".

Its based on a true story, i.e the 2008 crash and filmed in the style of documentary/fim with some humour thrown in.

It seeks to explain to the layman just how the 2008 was fuelled by sophisticated repackaging of sub prime mortgages in the USA and how ratings agencies and all other interested parties connived to keep the whole showboat rolling until it all finally blew up.

I doubt lessons have been learned and i think the UK housing market is slowly but surely heading in the same direction.

The UK was heading in that direction before 2008. That's why we had a crash as well. The Northern Rock et al went pop when they couldn't roll over their repackaging of mortgages.

Been there. Done that.:)

kingstreet

US lenders packaging sub-prime stuff in a RMBS was only one side of the coin in 2008. Allowing the likes of AIG to issue credit default swaps with no collateral, based only on their AAA rating was what was madness and resulted in the US Government having to bail out AIG to the tune of $180 billion at the time.

AnotherJoe

iantojones40 wrote: »

I'm sure you knew what I meant... just to clarify, if interest rates went up TO 4 or 5%

But please feel free to award yourself a chufty badge for being such a clever clogs.:T

Well I'd hope someone who relies on maths to make a point would be more careful with their words. .

I see no sign that interest rates are going to multiply 20-fold. Which is what you are hypothesising.

Yes, if they did that, there would be a problem, there would also be a problem if all manner of equally unlikely events took place. I'd wager £50 on Leicester making a comeback and winning the premiership again this season, ahead of base rates up 20-fold in the next five years. Why would the BoE wish to destroy the economy ?

Had you said "if base rate rises to 0.5% or 1% ........." then at least that's potentially plausible over a year or three. In the next five years with all that's going on re Brexit and banks, there's no scenario I can think of where a rise to 5% would happen. What's yours ?

iantojones40

I'm sure the BoE wouldn't wish to ''destroy the economy''... as you rightly illustrate we've got little more than a hollowed out zombie of an economy anyway, which is entirely reliant on zero interest rates, loose monetary policy and ever increasing levels of debt just to survive.
As much as Carney and the BoE like to think of themselves as some kind of all powerful masters of the universe there are actually many external factors that can effect inflation, the value of Stirling, the level of interest rates and the general economy as a whole over which the BoE have no control whatsoever.
With my figure of interest rates rates rising to 4-5% causing problems I was actually being very conservative... I personally think a rise up to just 1-2% would see a hell of a lot of people in a hell of a lot of financial difficulty