Worried about valuation

Sunsaru

Boom! Knew it would come back fine.
Red, white or rosé??

Mon2907

Let’s mix all three...!!! Honestly I can’t believe I worried about it and I’m back to square one again anyway. Fingers crossed again! 

Crashy_Time

Sunsaru said:

Boom! Knew it would come back fine.
Red, white or rosé??

It is their buyer`s lenders valuation that counts though?

Mickey666

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Getting_greyer said:

Fiesto88 said:

I’ll try and bring a little bit of positivity to counteract the gloom in this thread. 

I work for a mortgage lender. The surge in down-valuations that some people gleefully report here is complete fantasy. Now, as always, the vast majority of purchase valuations match the agreed sale price - the majority of reports coming back to us aren’t even reviewed by a person. Of the small number that are down-valued, there is usually a clearly stated reason and even then, we automatically accept them if they fall within a certain % tolerance of the agreed sale price. Most of the down-valuations we do see are remortgaging customers who’ve pushed their luck a little too much in their own estimation of how much their house is worth. They’re usually deliberately trying it on to get a better rate, expecting to be reined in. 

There really isn’t a grand conspiracy. Nobody’s actively trying to derail legitimate purchase transactions. Of course, it happens - but we’re talking about a handful of instances against vast numbers that pass without incident. 

This is exactly what an operative of a clandestine global cartel would say.

. . . which is exactly how all this nonsense is promulgated, along with the web's unique ability to put all the world's loonies in touch with each other so they can reinforce each other's fantasies.

Regardless of who Fiesto88 might work for, their comment "There really isn’t a grand conspiracy. Nobody’s actively trying to derail legitimate purchase transactions. Of course, it happens - but we’re talking about a handful of instances against vast numbers that pass without incident."  seems more rooted in reality than is convenient for the conspiracy theorists.

It's a bit like the moon landing deniers.  I suppose it's theoretically possible to have faked the entire thing but the reality is that it would be more difficult to keep such a thing secret than going to the moon in the first place!  But of course that's what THEY want you think, so what more proof do you need? 

? It`s not "secret" though is it? Plenty of people say it was faked, and plenty of people believe them.
There is no "conspiracy" about a bank reigning in lending, they see higher rates and possible job losses and want to minimise the potential for a borrower to default on their mortgage debt, seems pretty simple to me. Never mind faked moon landings the greatest "Conspiracy" of them all was getting large numbers of the public to believe that a basic house knocked up in a couple of weeks or less was worth decades of mortgage debt, LOL.

Well, compared with the alternative of paying a lifetime of rent, a couple of decades of mortgage seems like a bargain LOL

Many people are on 30 years+ mortgage debt, many will never pay it off.

. . . and many people are on 25 year mortgages (or less) and many pay it off early. I paid off my first mortgage in 9 years and my second one in 15 years. We can all cherry pick extreme examples, but extreme examples only extrapolate to extreme scenarios, which by definition are never likely to actually happen.

A bit like your prediction of a house price 'crash' for the past seven years . . . a scenario that has yet to happen.

Oh, and you still haven't answered my question about your definition of a 'crash' in percentage terms.  Come on, what is it going to be?  A 10% price reduction, 20%, 25%, 50%?  What would actually constitute a house price "crash"?

Nobody seems to really know what a crash is, I suppose when everyone has glum faces when property gets mentioned might be a good definition?
https://www.msn.com/en-gb/money/other/is-the-uk-heading-towards-a-house-price-crash/ar-AAKbrMd?ocid=BingNewsSearch

Brilliant!
So you're advocating timing the market by waiting for a coming 'crash' that you can't even define so won't be able to recognise.

OK, let me ask the question in a different way.  What percentage do house prices need to fall by before YOU would consider buying a property instead of continuing to rent?

No, I am advocating being aware that you are buying into the biggest property bubble in history and that losing money is a possibility and being aware of the potential for mortgage rate rises if the mortgage debt you are taking on is big and feels like a stretch.

But you'll only lose money by buying a house now and prices do 'crash' later IF rents also crash along with house prices.  How likely is that to happen?

Lets assume it costs £1000 per month to rent a suitable home.  You need somewhere to live and that's what it is going to cost - every mont, for as long as you live. Fine.

Now, suppose someone said instead of renting, you could borrow £x for 30 years which will cost you £1000 per month, after which you will own the house outright and have no more monthly payments.  Sounds like a better deal than renting doesn't it? 

And notice that I haven't even mentioned what £x is . . . because it's not really all that important.  What's important is that it will cost £1000 per month - the same as renting, but for a much shorter time, so much cheaper overall.

Now, what happens if the value of the house rises?  Nothing.  It's still costing you £1000 per month, the same as renting.  But what happens if the price of the house falls?  Again, nothing.  It's still costing you £1000, the same as renting.

Your monthly payments are not dependent on the value of the house, so all this angst over a house price 'crash' (which you can't even define) is somewhat over played.

But of course, THERE ARE other factors that are important here.  Interest rates will certainly affect those £1000 monthly payments, but if they go up then rents are likely to rise as well, so yes, you could end up paying more than £1000/month but not because you've bought a house per se, but because the cost of living in a house has risen - rent OR mortgage.

Also, if house prices do 'crash', you only 'lose' money if rents also 'crash' and you end up still paying your £1000 per month while a rental equivalent might be less.  But how likely is that to happen.  When was the last time that rents dropped significantly?  In reality, rents will increase over time due to inflation, whereas mortgage repayments are not affected by inflation, only by interest rates.  So while there may be some interest rate volatility over the years, there will DEFINITELY be constant inflationary forces driving up rents.  So that £1000 per month for rent OR mortgage comparison at year zero is going to look very different in year 30.

Finally, the 'big fear' of negative equity and being forced to sell up for less than the money borrowed.  Yes, that's certainly a risk when buying a house - not so much the negative equity thing, which is likely to be a short-lived thing, but finding yourself in a position where you're forced to sell.

However, this is a relatively short term risk for most home buyers and is typically confined to FTBs in the first few years of their purchase because of their typically high LTV.   Get over that short risk period (simply by not moving home) and you're pretty much home and dry because of the increasing equity in your home.  Second time buyers are rarely buying at a high enough LTV to risk negative equity and so are pretty much immune to it - and third time buyers even more so.  As time goes on, the risk decreases until, finally, the mortgage is paid off and you're totally immune to negative equity, by definition.

So the risks of buying a house don't really seem too bad compared with the alternative of renting, and for that to change there would have to be an event or series of events so catastrophic that house prices would likely be the last thing we'd all be worrying about!

And we've just been living through such a catastrophe!   Two years ago, the notion that major governments around the world would force the lockdown of their people and economies would have been seen as disastrous for all concerned . . . but it has happened, it has been unprecedented and  . . .  the world as we know it hasn't ended.  And house prices STILL haven't crashed - because everyone NEEDS somewhere to live and houses are in short supply.  Until that changes, nothing will change.

Sorry I had to skim read most of that, you put SO much energy into being right on this yet claim to have bought a house in what the 80`s? Why would you care if someone now gets basic shelter cheaply? Let`s just see what happens if inflation does take off, let`s hear what the people who actually piled into maximum mortgage debt because the stamp duty that they couldn`t afford was waived to Juice the market say when the economics change, I`m sure there will be thread after thread on it?

Yes, I bought my first house in the early 80s, which means I've LIVED through periods of high inflation and high mortgage interest rates so I can bring that actual experience to bear in these speculations, rather than just trying to guess what might happen.  Doesn't mean that the future will exactly repeat the past of course, but it does at least suggest that higher inflation and higher interest rates need not result in the crash you've been predicting for at least 7 years.  But we'll see.

As for 'cheap basic shelter', I'm not arguing for or against it.  If pushed for an opinion then I'd agree that lower house prices would probably be a generally good thing, but wishing for something and acknowledging reality are two different things.  I'm saying what I think will happen, not what I want to happen.  Plus, as mentioned many times, house prices are pretty much irrelevant to all outright home owners . . . which is surely the ultimate aim of all home buyers - becoming completely independent of the whole rigmarole.

As for putting "SO much energy into being right" I reckon I've got a long way to go before I can match your track record LOL.  

Crashy_Time

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Getting_greyer said:

Fiesto88 said:

I’ll try and bring a little bit of positivity to counteract the gloom in this thread. 

I work for a mortgage lender. The surge in down-valuations that some people gleefully report here is complete fantasy. Now, as always, the vast majority of purchase valuations match the agreed sale price - the majority of reports coming back to us aren’t even reviewed by a person. Of the small number that are down-valued, there is usually a clearly stated reason and even then, we automatically accept them if they fall within a certain % tolerance of the agreed sale price. Most of the down-valuations we do see are remortgaging customers who’ve pushed their luck a little too much in their own estimation of how much their house is worth. They’re usually deliberately trying it on to get a better rate, expecting to be reined in. 

There really isn’t a grand conspiracy. Nobody’s actively trying to derail legitimate purchase transactions. Of course, it happens - but we’re talking about a handful of instances against vast numbers that pass without incident. 

This is exactly what an operative of a clandestine global cartel would say.

. . . which is exactly how all this nonsense is promulgated, along with the web's unique ability to put all the world's loonies in touch with each other so they can reinforce each other's fantasies.

Regardless of who Fiesto88 might work for, their comment "There really isn’t a grand conspiracy. Nobody’s actively trying to derail legitimate purchase transactions. Of course, it happens - but we’re talking about a handful of instances against vast numbers that pass without incident."  seems more rooted in reality than is convenient for the conspiracy theorists.

It's a bit like the moon landing deniers.  I suppose it's theoretically possible to have faked the entire thing but the reality is that it would be more difficult to keep such a thing secret than going to the moon in the first place!  But of course that's what THEY want you think, so what more proof do you need? 

? It`s not "secret" though is it? Plenty of people say it was faked, and plenty of people believe them.
There is no "conspiracy" about a bank reigning in lending, they see higher rates and possible job losses and want to minimise the potential for a borrower to default on their mortgage debt, seems pretty simple to me. Never mind faked moon landings the greatest "Conspiracy" of them all was getting large numbers of the public to believe that a basic house knocked up in a couple of weeks or less was worth decades of mortgage debt, LOL.

Well, compared with the alternative of paying a lifetime of rent, a couple of decades of mortgage seems like a bargain LOL

Many people are on 30 years+ mortgage debt, many will never pay it off.

. . . and many people are on 25 year mortgages (or less) and many pay it off early. I paid off my first mortgage in 9 years and my second one in 15 years. We can all cherry pick extreme examples, but extreme examples only extrapolate to extreme scenarios, which by definition are never likely to actually happen.

A bit like your prediction of a house price 'crash' for the past seven years . . . a scenario that has yet to happen.

Oh, and you still haven't answered my question about your definition of a 'crash' in percentage terms.  Come on, what is it going to be?  A 10% price reduction, 20%, 25%, 50%?  What would actually constitute a house price "crash"?

Nobody seems to really know what a crash is, I suppose when everyone has glum faces when property gets mentioned might be a good definition?
https://www.msn.com/en-gb/money/other/is-the-uk-heading-towards-a-house-price-crash/ar-AAKbrMd?ocid=BingNewsSearch

Brilliant!
So you're advocating timing the market by waiting for a coming 'crash' that you can't even define so won't be able to recognise.

OK, let me ask the question in a different way.  What percentage do house prices need to fall by before YOU would consider buying a property instead of continuing to rent?

No, I am advocating being aware that you are buying into the biggest property bubble in history and that losing money is a possibility and being aware of the potential for mortgage rate rises if the mortgage debt you are taking on is big and feels like a stretch.

But you'll only lose money by buying a house now and prices do 'crash' later IF rents also crash along with house prices.  How likely is that to happen?

Lets assume it costs £1000 per month to rent a suitable home.  You need somewhere to live and that's what it is going to cost - every mont, for as long as you live. Fine.

Now, suppose someone said instead of renting, you could borrow £x for 30 years which will cost you £1000 per month, after which you will own the house outright and have no more monthly payments.  Sounds like a better deal than renting doesn't it? 

And notice that I haven't even mentioned what £x is . . . because it's not really all that important.  What's important is that it will cost £1000 per month - the same as renting, but for a much shorter time, so much cheaper overall.

Now, what happens if the value of the house rises?  Nothing.  It's still costing you £1000 per month, the same as renting.  But what happens if the price of the house falls?  Again, nothing.  It's still costing you £1000, the same as renting.

Your monthly payments are not dependent on the value of the house, so all this angst over a house price 'crash' (which you can't even define) is somewhat over played.

But of course, THERE ARE other factors that are important here.  Interest rates will certainly affect those £1000 monthly payments, but if they go up then rents are likely to rise as well, so yes, you could end up paying more than £1000/month but not because you've bought a house per se, but because the cost of living in a house has risen - rent OR mortgage.

Also, if house prices do 'crash', you only 'lose' money if rents also 'crash' and you end up still paying your £1000 per month while a rental equivalent might be less.  But how likely is that to happen.  When was the last time that rents dropped significantly?  In reality, rents will increase over time due to inflation, whereas mortgage repayments are not affected by inflation, only by interest rates.  So while there may be some interest rate volatility over the years, there will DEFINITELY be constant inflationary forces driving up rents.  So that £1000 per month for rent OR mortgage comparison at year zero is going to look very different in year 30.

Finally, the 'big fear' of negative equity and being forced to sell up for less than the money borrowed.  Yes, that's certainly a risk when buying a house - not so much the negative equity thing, which is likely to be a short-lived thing, but finding yourself in a position where you're forced to sell.

However, this is a relatively short term risk for most home buyers and is typically confined to FTBs in the first few years of their purchase because of their typically high LTV.   Get over that short risk period (simply by not moving home) and you're pretty much home and dry because of the increasing equity in your home.  Second time buyers are rarely buying at a high enough LTV to risk negative equity and so are pretty much immune to it - and third time buyers even more so.  As time goes on, the risk decreases until, finally, the mortgage is paid off and you're totally immune to negative equity, by definition.

So the risks of buying a house don't really seem too bad compared with the alternative of renting, and for that to change there would have to be an event or series of events so catastrophic that house prices would likely be the last thing we'd all be worrying about!

And we've just been living through such a catastrophe!   Two years ago, the notion that major governments around the world would force the lockdown of their people and economies would have been seen as disastrous for all concerned . . . but it has happened, it has been unprecedented and  . . .  the world as we know it hasn't ended.  And house prices STILL haven't crashed - because everyone NEEDS somewhere to live and houses are in short supply.  Until that changes, nothing will change.

Sorry I had to skim read most of that, you put SO much energy into being right on this yet claim to have bought a house in what the 80`s? Why would you care if someone now gets basic shelter cheaply? Let`s just see what happens if inflation does take off, let`s hear what the people who actually piled into maximum mortgage debt because the stamp duty that they couldn`t afford was waived to Juice the market say when the economics change, I`m sure there will be thread after thread on it?

Yes, I bought my first house in the early 80s, which means I've LIVED through periods of high inflation and high mortgage interest rates so I can bring that actual experience to bear in these speculations, rather than just trying to guess what might happen.  Doesn't mean that the future will exactly repeat the past of course, but it does at least suggest that higher inflation and higher interest rates need not result in the crash you've been predicting for at least 7 years.  But we'll see.

As for 'cheap basic shelter', I'm not arguing for or against it.  If pushed for an opinion then I'd agree that lower house prices would probably be a generally good thing, but wishing for something and acknowledging reality are two different things.  I'm saying what I think will happen, not what I want to happen.  Plus, as mentioned many times, house prices are pretty much irrelevant to all outright home owners . . . which is surely the ultimate aim of all home buyers - becoming completely independent of the whole rigmarole.

As for putting "SO much energy into being right" I reckon I've got a long way to go before I can match your track record LOL.  

1) There is no comparison to now and the 80`s, the levels of personal debt and dependence on low interest rates are night and day.
2) The effort you put into this suggests that prices are far from irrelevant  to outright owners, and for many outright owners the house is the ONLY financial asset they have! The last thing they want is for new generations of mortgage borrowers to look behind the curtain....
3) My posts tend to be concise and to the point, the post of yours I responded to was quite long and covered many of the same points you have made numerous times.

Crashy_Time

Fiesto88 said:

I’ll try and bring a little bit of positivity to counteract the gloom in this thread. 

I work for a mortgage lender. The surge in down-valuations that some people gleefully report here is complete fantasy. Now, as always, the vast majority of purchase valuations match the agreed sale price - the majority of reports coming back to us aren’t even reviewed by a person. Of the small number that are down-valued, there is usually a clearly stated reason and even then, we automatically accept them if they fall within a certain % tolerance of the agreed sale price. Most of the down-valuations we do see are remortgaging customers who’ve pushed their luck a little too much in their own estimation of how much their house is worth. They’re usually deliberately trying it on to get a better rate, expecting to be reined in. 

There really isn’t a grand conspiracy. Nobody’s actively trying to derail legitimate purchase transactions. Of course, it happens - but we’re talking about a handful of instances against vast numbers that pass without incident. 

Where do you see mortgage rates heading?

Crashy_Time

Did they get a valuation OP?

Mon2907

It’s tomorrow. I’ll keep you posted. My anxiety can’t take any more! 

Mr_owl

It seems I have got an mortgage offer without lenders valuation. I have not heard a thing and all of a sudden I told by the broker that I have got accepted.

badger09

Mr_owl said:

It seems I have got an mortgage offer without lenders valuation. I have not heard a thing and all of a sudden I told by the broker that I have got accepted.

For a straightforward property which is comparable to others and where there have been recent sales, some lenders are simply doing 'desktop' valuations, so not even driving past. Also more likely if your LTV is very low as lenders aren't concerned about recouping their money.