House Price Crash Discussion Thread

setmefree2

I'm glad for anyone who benefits from the fall, particularly anyone who wasn't been able to get on the ladder. I don't really care if house prices fall TBH. But the idea that somehow we should have all sold up and made a profit doesn't really add up to me. The costs don't stack up. Nor does a celebration seem in order as interest rates are rising....and unemployemt has to be a real worry for all of us.:o

Anyway, I hope you find somwhere lovely to live and a realy tasty interest rate.;)

IveSeenTheLight

pickledtink wrote: »

Smaller mortgage will offset higher interest rates and I doubt if any good mortgage deals will remain shortly anyway.

Are you so sure?
I can agree you may have a lower mortgage but it is also likely you will only get a higher interest mortgage.
Factor in the rent paid while waiting and there may not be that much of a saving, if at all.

beingjdc

IveSeenTheLight wrote: »

Are you so sure?
I can agree you may have a lower mortgage but it is also likely you will only get a higher interest mortgage.
Factor in the rent paid while waiting and there may not be that much of a saving, if at all.

Not this again. Since in 99% of the country renting is cheaper than the interest on a mortgage, "factoring in the rent paid while waiting" is misleading. You should be factoring in the saving made by renting as against paying interest from day one at the higher price.

boinging_2

setmefree2 wrote: »

I'm glad for anyone who benefits from the fall, particularly anyone who wasn't been able to get on the ladder. I don't really care if house prices fall TBH. But the idea that somehow we should have all sold up and made a profit doesn't really add up to me. The costs don't stack up. Nor does a celebration seem in order as interest rates are rising....and unemployemt has to be a real worry for all of us.:o

Anyway, I hope you find somwhere lovely to live and a realy tasty interest rate.;)

Just talk me through step by step how selling my house in August 2007 and going into rented accommodation isn't going to save me money?

dudleyboy

pickledpink wrote: »

Me again.

How long do you anticipate waiting before you buy? I know some of you seem to think prices will keep on falling for years to come - do you not worry that some of you will be too OLD to get a mortgage in,say, 5/10 years time? Some of you seem to be old NOW! I

So how old is "old" then, Pink?

You really don't do yourself any favours, do you? Age discrimination is as frowned upon in modern Britain as racism, sexism, and homophobia. You really should take more care in how you present yourself and the attitudes you express.

Besides, in all the tightening of lending criteria I've seen absolutely no indication that older individuals are any more adversely effected than their more youthful equivalents. In fact, if anything, I would argue that with higher deposits demanded by lenders in the future (as was always the case until recent madness), most people will have to wait and save for several years before buying... and time makes no one younger.

Mind you, now that you've touched upon this issue of age once again, I would be interested to learn how, at such a tender young age, you've managed to amass such a flourishing and profitable property empire? Was it years of saving your hard earned money, a few wise business investments here and there, or did mummy and daddy give you a helping hand?

pickledtink

IveSeenTheLight wrote: »

Are you so sure?
I can agree you may have a lower mortgage but it is also likely you will only get a higher interest mortgage.
Factor in the rent paid while waiting and there may not be that much of a saving, if at all.

Yes I'm sure. I'm paying less in rent than my equity is earning in interest. By paying the rent with what would normally be my mortgage payment I am saving the interest in total. It's earning about £520.00 a month in an easy access account so I could pluck the capital out and buy tomorrow if I want. If i put all or some of it in higher interest earning accounts it could be considerably more. Meanwhile I'm gaining more buying power in a dropping market. Even calculating interest rates going to 10% I am better off waiting in rented.
However I have equity. If you don't the sums are obviously different but if the rent is less than the mortgage staying put and setting that difference towards your deposit will get you a better interest rate on LTV and give you a bigger deposit. You can then buy your property cheaper a bit later.
I'm now seriously going to rent for the next year certainly despite missing having my own home.

IveSeenTheLight

beingjdc wrote: »

Not this again. Since in 99% of the country renting is cheaper than the interest on a mortgage, "factoring in the rent paid while waiting" is misleading. You should be factoring in the saving made by renting as against paying interest from day one at the higher price.

But with mortgages being withdrawing every day, your going to see that you are getting only mortgages with much higher interest rates on your lower borrowed rate.

The trick is to get in on long term fixed rate as soon as possible

IveSeenTheLight

pickledtink wrote: »

Yes I'm sure. I'm paying less in rent than my equity is earning in interest. By paying the rent with what would normally be my mortgage payment I am saving the interest in total. It's earning about £520.00 a month in an easy access account so I could pluck the capital out and buy tomorrow if I want. If i put all or some of it in higher interest earning accounts it could be considerably more. Meanwhile I'm gaining more buying power in a dropping market. Even calculating interest rates going to 10% I am better off waiting in rented.
However I have equity. If you don't the sums are obviously different but if the rent is less than the mortgage staying put and setting that difference towards your deposit will get you a better interest rate on LTV and give you a bigger deposit. You can then buy your property cheaper a bit later.
I'm now seriously going to rent for the next year certainly despite missing having my own home.

But have you factored in higher interest rates
I've not checked the figures myself but it looks feasable from SetMeFree2 data that for every 1% higher interest rates, you need an 18% drop in house price when paying a mortgage over 25 years.

I will of course check out this for myself later and it will change if you pay over a shorter term but you need to factor in this

See the below link for SetMeFree2's post

http://forums.moneysavingexpert.com/showpost.html?p=9871389&postcount=2170

merlinthehappypig

[FONT=Verdana, Arial, Helvetica, sans-serif]From Moneymorning today:[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif][/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The credit crunch is set to get even worse.[/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]In a week where we’ve seen some lenders pull out of the mortgage market altogether – if temporarily – and others raise interest rates substantially in the hope of putting off customers, many borrowers may be wondering how much worse it could get.[/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]But according to the Bank of England’s latest quarterly Credit Conditions survey, over the next three months lenders expect to cut lending further, raise charges, and be more demanding on terms, such as hiking deposit levels, for example.[/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]So it’s little wonder that the IMF reckons Britain is one of the countries most vulnerable to a property crash…[/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]Along with France and the Netherlands, the IMF believes Britain has one of the world’s most precarious property markets. It calculates that at least 30% of the value of homes cannot be explained by fundamentals such as demand or rising incomes, reports The Times. [/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]Of course, this has been obvious to anyone with any sense and has been for a long time. High house prices aren’t about supply and demand, or rising incomes – they’ve been all about availability of credit for years now. And that’s vanishing rapidly, even for wealthy buyers. C&G now demands a £200,000 deposit if you want to borrow £1m, double what it was at the start of this week. So much for the unassailable London market.[/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]The worst fall in commercial property prices in 20 years[/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]As David Wighton points out in The Times, if residential housing follows commercial property, then times are set to get very hard indeed. Since June last year alone, the average commercial property price has fallen by 15%, according to the Investment Property Databank. The City reckons that by the end of this year, prices will have fallen 26% in 18 months.[/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]This is the worst fall in commercial property prices seen since records began. That was a little more than 20 years ago, but of course, that includes the recession of the 1990s. And most of this has so far been driven by the credit squeeze, though it will soon be exacerbated by job cutting in the City and banks reining in expansion. [/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]If the commercial property crash has so far been worse than the 1990s, then it’s not much of a jump to imagine that the coming residential housing crash could also be worse. [/FONT]

Business owners are suffering too

[FONT=Verdana, Arial, Helvetica, sans-serif]But mortgages aren’t the only things that banks and financial players need to worry about. Banks have apparently seen default rates on medium-sized and large companies rise more sharply than expected over the past three months.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The same over-confidence that infected the mortgage market also seeped into all other forms of lending. At the high point of the credit bubble, lenders were happy to dole out large sums of money against minimal assets at tiny interest rate levels. Now the same credit squeeze hurting commercial and residential property owners is also squeezing business owners. [/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]Consumers are borrowing desperately to pay their bills, via the only route available to them. The surge in personal loans and credit card borrowing in February (up £2.4bn from £900m) wasn’t down to consumers going on a retail bender. It’s because they can no longer remortgage cheaply to help them pay the bills. Now they need to move towards more expensive forms of credit. The same thing happened in the US as the mortgage market dried up there. [/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]This is what happens in a credit crunch. Debts that people believed they’d never have to pay off suddenly crystallise, as refinancing becomes impossible. And for many people, those debts simply won’t be affordable. Particularly as the businesses employing them are facing the same problems, and are unlikely to be able to increase wages to compensate, even if they wanted to.[/FONT]

carolt

IveSeenTheLight wrote: »

But have you factored in higher interest rates
I've not checked the figures myself but it looks feasable from SetMeFree2 data that for every 1% higher interest rates, you need an 18% drop in house price when paying a mortgage over 25 years.

I will of course check out this for myself later and it will change if you pay over a shorter term but you need to factor in this

See the below link for SetMeFree2's post

http://forums.moneysavingexpert.com/showpost.html?p=9871389&postcount=2170

That's nonsense.

Unless you're talking about fixing your current rate for 25 years, there is no way you can make any meaningful comparisons on the cost of 1% more on interest rates over the average 25 year life of the mortgage. And how many people take out 25 year fixed rates???

What IS sure, is that when you are buying a house, the debt you borrow is fixed. Interest rates may well fluctuate over those 25 years, but the amount you borrowed will only reduce if you pay off the capital.

So even if interest rates go to 0% (highly unlikely), buying a house at a million pounds, say, still leaves you with a debt of...a million pounds. That has to be repaid.

In reality, of course, interest rates aren't going to go to zero. And average house prices aren't a million quid.

But the idea that one should just jump in and buy the first overpriced hole just in case interest rates rise temporarily is just plain stupid.

Far better to rent until your dream home is available at a reasonable price.

That's what a lot of buyers are now doing..and a buyers' strike makes for a lot of unhappy sellers.....:rolleyes:

You one of them, IveSeenTheLight?