Interest rates

budget_counsellor_shaz

Gorgeous_George wrote: »

Yes, it must be galling to see people who own their homes not wanting a crash.

A 50% crash in prices will cause untold pain to millions of people. Divorce and suicide will hit new highs. Hardly great for 'society'.

Tighter lending should cause prices to fall and coupled with cheaper mortgages could improve 'affordability'. Simply affording a house will not be enough if tighter lending starve the would-be homebuyer of the necessary funds. Prices will fall but those who cannot afford today will probably still be unable to afford tomorrow. There needs to be more homes.

GG

How do you come to that conclusion GG?

'A 50% crash in prices will cause untold pain to millions of people. Divorce and suicide will hit new highs.'

Although I do not think that prices will reduce by 50% even if they did why would Divorce and suicides increase?

However if the mortgage interests increases I think that this is likely to have a detramental impact on mortgage payers.

A crash would have an impact on property investers.........

People that have a house as a home and are paying their mortgage would continue to pay what they were previously paying (providing the mortgage payments were the same). :rolleyes:

A house reduction would benefit society for example if prices reduced by 10% although houses would sell for less you would then be able to buy a house for 10% less. The main reason that this would benefit society would be that less people would be priced out of ever being able to afford a house.:T

Shaz

mr.broderick

budget_counsellor_shaz wrote: »

How do you come to that conclusion GG?

'A 50% crash in prices will cause untold pain to millions of people. Divorce and suicide will hit new highs.'

Although I do not think that prices will reduce by 50% even if they did why would Divorce and suicides increase?

However if the mortgage interests increases I think that this is likely to have a detramental impact on mortgage payers.

A crash would have an impact on property investers.........

People that have a house as a home and are paying their mortgage would continue to pay what they were previously paying (providing the mortgage payments were the same). :rolleyes:

A house reduction would benefit society for example if prices reduced by 10% although houses would sell for less you would then be able to buy a house for 10% less. The main reason that this would benefit society would be that less people would be priced out of ever being able to afford a house.:T

Shaz

I'm sorry to say this shaz, cause i do like you, but you are totally wrong with this post and have exposed your ignorance to the masses.
Anybody else been pm'd by vansboy by the way?

budget_counsellor_shaz

mr.broderick wrote: »

I'm sorry to say this shaz, cause i do like you, but you are totally wrong with this post and have exposed your ignorance to the masses.
Anybody else been pm'd by vansboy by the way?

What part of my post is wrong in your opinion?

1) Interest rates impact mortgage payers

2) A property crash would impact property investors

3)......for example if prices reduced by 10% although houses would sell for less you would then be able to buy a house for 10% less. The main reason that this would benefit society would be that less people would be priced out of ever being able to afford a house

Shaz:rolleyes:

mr.broderick

budget_counsellor_shaz wrote: »

What part of my post is wrong in your opinion?

1) Interest rates impact mortgage payers

2) A property crash would impact property investors

3)......for example if prices reduced by 10% although houses would sell for less you would then be able to buy a house for 10% less. The main reason that this would benefit society would be that less people would be priced out of ever being able to afford a house

Shaz:rolleyes:

I'm too busy trying to find out if anyone else has been pm'd by vansboy to be drawn in to an argument with you.
I never justify my posts, i am always right..Dont forget it shaz.

budget_counsellor_shaz

mr.broderick wrote: »

I'm too busy trying to find out if anyone else has been pm'd by vansboy to be drawn in to an argument with you.
I never justify my posts, i am always right..Dont forget it shaz.

Well I'm wrong most of the time.......but not this time:rotfl:

IveSeenTheLight

budget_counsellor_shaz wrote: »

A house reduction would benefit society for example if prices reduced by 10% although houses would sell for less you would then be able to buy a house for 10% less. The main reason that this would benefit society would be that less people would be priced out of ever being able to afford a house.:T

Shaz

The problem is Shaz that I believe house prices have risen so much due to demand out there.

It was the affordability that caused the house price crash in the early nineties (high interest rates and high unemployment)

Once the economy got over the high interest rate and lowered unemployment, we saw an increase in demand and as such an increase in the property prices.

Demand is now decreasing, not because there are less people looking for houses but less that can afford.

People wanting to buy has not decreased, only the amount of people who can afford.

In fact the amount of UK's population is on the increase, reports suggest an increase to 75 million in the next 10 years.

If this appears to be true, coupled with any market correction / change in the credit availability, then demand is only going to be much more than there ever has been.

What is needed is more housing, to cater for the buyers demand. With more housing (even renovated areas) it will mean less demand per property and a more linear house price index

budget_counsellor_shaz

IveSeenTheLight wrote: »

The problem is Shaz that I believe house prices have risen so much due to demand out there.

It was the affordability that caused the house price crash in the early nineties (high interest rates and high unemployment)

Once the economy got over the high interest rate and lowered unemployment, we saw an increase in demand and as such an increase in the property prices.

Demand is now decreasing, not because there are less people looking for houses but less that can afford.

People wanting to buy has not decreased, only the amount of people who can afford.

In fact the amount of UK's population is on the increase, reports suggest an increase to 75 million in the next 10 years.

If this appears to be true, coupled with any market correction / change in the credit availability, then demand is only going to be much more than there ever has been.

What is needed is more housing, to cater for the buyers demand. With more housing (even renovated areas) it will mean less demand per property and a more linear house price index

There are currently loads and loads of houses for sale just look on rightmove. (a number of those houses are chain free) The problem is affordable houses. This would help if the house prices fell.

With the point you make on increase in the population .......I know of loads of large houses which were used to house one family/ couple/ single have now been turned into flats, housing many families/couples/singles. Some of these large houses have also been turned into old peoples homes which house lots of people. Also a lot of families from other counties sleep many more to a house than the British.

Affordable homes is the key;)

Shaz:rolleyes:

tr3mor

IveSeenTheLight wrote: »

If this appears to be true, coupled with any market correction / change in the credit availability, then demand is only going to be much more than there ever has been.

I really wish people would stop using and supply and demand argument without knowing any basic economics.

Demand is a curve defining the number of people who are prepared and able to pay a certain price for a good. With the credit crunch demand for houses is moving rapidly left since banks have stopped lending people the money.

Basically, I could use the same argument that everyone citing "supply and demand" uses to state that there is a shortage of Aston Martins since I can't afford one.

carpetbelly

tr3mor wrote: »

With the credit crunch demand for houses is moving rapidly left since banks have stopped lending people the money.

Not true... Banks have become more restrictive at who they lend their money too and what type of property it is to.

The bank I'm workign for has restricted it's lending drastically to new builds, the default rate on them is double what was predicted.

And scorecards have been adjusted for risk and nothing more. The same amount of money will be lent but only to risk worthy people.

Granted I can only talk about the bank I work for but it is a large bank and a large provider of mortgages.

Pobby

Affordable homes.No one has really explained that to me.In Hereford they had``affordable homes``priced at £160k.That would attract a repayment mortgage of around £1,000 a month.OK for some that might be affordable but for how many?

One point that has mot been raised in all this is what happened in the property boom of the early 70`s .

We brought just after that boom and were paying about 30% of our income on the repayments.Everything we had was second hand and our black and white TV was got through Green Shield stamps-lol.

However,something quite amazing happened-wage inflation.That figure of 30% dropped to around 7% of our take home money.If you will,our debt was wafting away and in 5 years became insignificant so up the ladder we went.

It seems that this situation is not likely to repeat itself with the BOE firmly committed to keep inflation under control.So to sum up,previous booms conincided with inflation which filtered down to rising incomes.This has not happened this time.