Advice - negative equity

Crashy_Time

chappers wrote: »

As others have said don't worry, it only becomes a problem if you really are forced to sell.
London and the home counties are feeling a bit of a squeeze at the moment, a squeeze that may spread further. But these are the areas that will also recover the quickest.
As you live in your house and pay off your mortgage the equity comes back to you and inflation over time reduces the actual cost to pay the mortgage down

Inflation without wage inflation makes it harder to pay a mortgage debt down, and if interest rates rise many big loans will be even harder to pay down.

_CC_

Crashy_Time wrote: »

Inflation without wage inflation makes it harder to pay a mortgage debt down, and if interest rates rise many big loans will be even harder to pay down.

A) wage growth has only been zero or below for two short periods in the last 15 or so years. Real wage growth has been low, which is maybe what you mean, but this is of less importance as mortgage debt is static. Of course, the losers are people who rent - rent inflation has outstripped wages and general inflation for a long time

"even harder" suggests people are struggling now. I know you'd like that to be the case, but I'd encourage you to actually seek out the facts. Average repayments are very affordable by historic standards. Yes, this is by a large part due to low rates, but they'll remain within norms even with the forecasted tightening.

C) strange how the OP posts an unbelievable story all about negative equity, doesn't come back to reply, but the resident HPC troll bumps it nah, probably being too cynical...

Crashy_Time

_CC_ wrote: »

A) wage growth has only been zero or below for two short periods in the last 15 or so years. Real wage growth has been low, which is maybe what you mean, but this is of less importance as mortgage debt is static. Of course, the losers are people who rent - rent inflation has outstripped wages and general inflation for a long time

"even harder" suggests people are struggling now. I know you'd like that to be the case, but I'd encourage you to actually seek out the facts. Average repayments are very affordable by historic standards. Yes, this is by a large part due to low rates, but they'll remain within norms even with the forecasted tightening.

C) strange how the OP posts an unbelievable story all about negative equity, doesn't come back to reply, but the resident HPC troll bumps it nah, probably being too cynical...

A) Yes, mortgage debt is static, it doesn`t reduce even when your house price does, beware of borrowing very large amounts, especially at the lowest interest rates in history!


Many in the UK are one or two (three if they are lucky) pay checks from bust, this is common knowledge


C) This guy seems to have bought the rents fairy tale as well


https://www.property118.com/section-24-will-make-bankrupt/

chappers

Crashy_Time wrote: »

Inflation without wage inflation makes it harder to pay a mortgage debt down, and if interest rates rise many big loans will be even harder to pay down.

Interest rates are irrelevant, if they rise they rise. It's inflation that takes care of the relative value of the pound.

It make no difference if you are paying your mortgage at 2% or 10% now which ever you are on inflation will make it effectively easier to manage in 10 years time. whether it is manageable if rates rise from 2% to 10% is a different matter all together.

If you want to discuss the economy as a whole then that of course is a different matter all together, but the OP was concerned about a short-term negative equity situation.

If you want to take any normal mortgage term period over time, then wages have increased, house prices have increased and there has been positive inflation.

I know you are hoping for that massive extended down turn that might bring you back into profitability, but the 20+ year downturn you crave just isn't coming and anything that big would leave you just as helpless as the rest of us.

MobileSaver

Crashy_Time wrote: »

beware of borrowing very large amounts, especially at the lowest interest rates in history!

Seriously?!? A 10 year fixed rate 2.49% mortgage is a really bad idea in your expert financial opinion?

I think I managed to clear the mortgage on my previous home in around 12 or 13 years so with your brilliant financial acumen you're probably doing even better after just 10 years? Care to reveal how well you are doing? How much of your current home have you paid off so far? 50%, 60%, 75%? I'm sure the OP would love to hear your success story...

Crashy_Time wrote: »

Many in the UK are one or two (three if they are lucky) pay checks from bust, this is common knowledge

True, there will always be some who under-achieve, over-reach or simply prioritise other things over financial prosperity. That's part of the rich tapestry of life.

However, it is even more common knowledge that the vast majority of home-owners have realised that buying their own home and paying off their own mortgage rather than their landlord's was probably the best thing they ever did.

chelseablue

In my case I'd much rather go to work to pay my mortgage than someone else's.


Plus its cheaper to own my house than rent it (mortgage is £720 a month compared to around £1,300 a month to rent it)


To be in negative equity the prices would have to crash by more than 50%.
If that happened we'd all be in the same boat not just me. I guess it would take something pretty major for that to happen

ReadingTim

Sell and sell now!

Home ownership's not for you, from an intellectual perspective.

Crashy_Time

chappers wrote: »

Interest rates are irrelevant, if they rise they rise. It's inflation that takes care of the relative value of the pound.

It make no difference if you are paying your mortgage at 2% or 10% now which ever you are on inflation will make it effectively easier to manage in 10 years time. whether it is manageable if rates rise from 2% to 10% is a different matter all together.

If you want to discuss the economy as a whole then that of course is a different matter all together, but the OP was concerned about a short-term negative equity situation.

If you want to take any normal mortgage term period over time, then wages have increased, house prices have increased and there has been positive inflation.

I know you are hoping for that massive extended down turn that might bring you back into profitability, but the 20+ year downturn you crave just isn't coming and anything that big would leave you just as helpless as the rest of us.

So the massive QE program and emergency interest rates for so long was for what, no reason at all, just an experiment?

Crashy_Time

ViolaLass wrote: »

You should probably hassle your neighbours a bit more - you never know, with more pressure, they might give in and raise their price. And they'd be so grateful when they couldn't sell and move on with their lives...

Just don`t police threads on the internet trying to do this, it is more obvious to more people then, and embarrassing :rotfl: