Finally seeing house prices drop?

SuseOrm

If we’re also gonna welcome the Ukrainian refugees which we absolutely should,  that puts further strain on the housing market I can’t see any government being stupid enough to cause a house price crash at the same time.  Surely then we’re going to have to house the indigenous population as well as all these poor souls coming over from Ukraine whilst the banks sit with empty repossessed properties.  I just can’t see it.  

spoovy

But it's never a good time for a government to induce or allow a house price crash, not from their point of view, thats why they always do anything and everything they can to stop them.

I believe were seeing Modern Monetary Theory by the back door. The public generally doesn't buy it so its not explicit, but that's whats happening nonetheless.  Same all over the western world, and we're all in it too deep now to do anything but continue the experiment.

HotPantsCruiser

lookstraightahead said:

MobileSaver said:

HotPantsCruiser said:

If it is hard for most people in the UK to buy a house it will be VERY hard for a lot of people to sell a house in the UK.

Agreed, it will be harder for both, the difference being that every month that goes by the homeowner is still paying off their own mortgage while the renter is still paying off their landlord's mortgage. Given the choice I know which group I'd rather be in...

Well my experience during hard times was that interest rates were sky high and people were using credit to pay their mortgages. Renting is probably cheaper in those circumstances. Cheaper to pay a landlords mortgage than going into debt and paying the bank thousands in interest. And then possibly losing 'your' (the lender's) house.

Well put, it isn`t the idea of homeownership that is wrong IMO it is the idea that you should take on decades of mortgage debt for relatively unexceptional property that is the problem, people who have over-stretched will be starting to feel uncomfortable if mortgage rates start rising. Many landlords don`t have a mortgage so people should see rent as a "cost" which is the alternative to being saddled with 100`s of thousands worth of mortgage debt and a property which could become hard to sell in future, one size doesn`t fit all in this case.

HotPantsCruiser

MobileSaver said:

lookstraightahead said:

MobileSaver said:

Agreed, it will be harder for both, the difference being that every month that goes by the home-owner is still paying off their own mortgage while the renter is still paying off their landlord's mortgage.

people were using credit to pay their mortgages. Renting is probably cheaper in those circumstances. ... And then possibly losing 'your' (the lender's) house.

As @jimbog pointed out, renters will be hit with rising costs the same as home-owners are. Renters already pay more of their wages towards rent than home-owners pay towards their mortgage so it stands to reason that in fact renters are more likely to need to use credit cards to pay their monthly housing costs.

Even in the worst times the number of home-owners who lost their home was tiny. New policies and rules introduced in the last decade or so mean that the number who lose their home in the future will be even smaller.

Or they could apply for housing benefit, you can`t walk away from a large mortgage debt though, even if the market crashes.

Getting_greyer

SuseOrm said:

So genuine question,  if everybody took out fixed mortgage rates for at least two years if not five in many cases in the last 12 months why would they raise interest rates ? what will be the point of that ? how would that affect anything because the only people I can see that would then pay more are those who bought at least three,  potentially five years ago and they will all have enough equity to Cushion themselves anyway.  

I just don’t see what purpose it would serve people are getting 10 to 20% pay rise is when they have the balls to move jobs,  the issue is at the moment not many people do.  But any wage inflation is getting hoovered up by increase in food energy and Travel costs and therefore I just don’t see what raising interest rates would do to control the inflation ? 

Nominal interest rate - inflation = real interest rate.

Low interest rates stimulate borrowing with spending being bought forward.  Eg firms borrow to invest which create jobs and output.  High interest rates to defer spending, idea to bring output down to equilibrium. 

That said, Bank of England are directed by chancellor to target inflation regardless of employment levels as price stability seen as more crucial. Same target of 2% for decades. Just enough to devalue debt but not enough to make you have to buy bread with wheelbarrows of cash.

BoE and commercial banks constantly lending to each other and deposits with BoE. As the rate rises, the cost rises which is passed onto xonsumers to protect profit margins. 

spoovy

HotPantsCruiser said:

Well put, it isn`t the idea of homeownership that is wrong IMO *it is the idea that you should take on decades of mortgage debt for relatively unexceptional property that is the problem*, people who have over-stretched will be starting to feel uncomfortable if mortgage rates start rising. Many landlords don`t have a mortgage so people should see rent as a "cost" which is the alternative to being saddled with 100`s of thousands worth of mortgage debt and a property which could become hard to sell in future, one size doesn`t fit all in this case.

You're free to spend a couple of decades renting and paying off someone else's mortgage(s) if you wish, but I don't see why it's a problem that other people choose to buy their own house in the same period. 

SuseOrm

HotPantsCruiser said:

MobileSaver said:

lookstraightahead said:

MobileSaver said:

Agreed, it will be harder for both, the difference being that every month that goes by the home-owner is still paying off their own mortgage while the renter is still paying off their landlord's mortgage.

people were using credit to pay their mortgages. Renting is probably cheaper in those circumstances. ... And then possibly losing 'your' (the lender's) house.

As @jimbog pointed out, renters will be hit with rising costs the same as home-owners are. Renters already pay more of their wages towards rent than home-owners pay towards their mortgage so it stands to reason that in fact renters are more likely to need to use credit cards to pay their monthly housing costs.

Even in the worst times the number of home-owners who lost their home was tiny. New policies and rules introduced in the last decade or so mean that the number who lose their home in the future will be even smaller.

Or they could apply for housing benefit, you can`t walk away from a large mortgage debt though, even if the market crashes.

I actually know with people who have their Intyre mortgage paid off for them by the equivalent of housing benefits for homeowners.  

I believe the scheme has changed now to mean that the government steps in and takes over the loan for the duration of unemployment which is repayable but it does keep people in their homes.  

nicknameless

There is a definite slowing where we are keeping an eye on.  Whether that equates to prices dropping I couldn't say.  Some properties still going SSTC quickly but the overpriced dross now hanging around much like it should.

HotPantsCruiser

spoovy said:

HotPantsCruiser said:

Well put, it isn`t the idea of homeownership that is wrong IMO *it is the idea that you should take on decades of mortgage debt for relatively unexceptional property that is the problem*, people who have over-stretched will be starting to feel uncomfortable if mortgage rates start rising. Many landlords don`t have a mortgage so people should see rent as a "cost" which is the alternative to being saddled with 100`s of thousands worth of mortgage debt and a property which could become hard to sell in future, one size doesn`t fit all in this case.

You're free to spend a couple of decades renting and paying off someone else's mortgage(s) if you wish, but I don't see why it's a problem that other people choose to buy their own house in the same period. 

As I said it is a problem because artificially low interest rates for too long mean they are paying way more than they should for their choice.

MobileSaver

HotPantsCruiser said:

it is the idea that you should take on decades of mortgage debt for relatively unexceptional property that is the problem,

Er, so you think it's better to pay the landlord's mortgage plus their extra profit on top instead?!?! lookstraightahead's assertion is simply incorrect, paying your landlord's mortgage is not cheaper than paying your own mortgage.

How else can you get to live in a "relatively unexceptional property" unless you pay for it one way or the other for decades? And if mortgage debt payments are less than rent payments then where exactly is the problem?

HotPantsCruiser said:

Many landlords don`t have a mortgage

That's because lovely people like you have paid their mortgage off for them! LOL

HotPantsCruiser said:

Or they could apply for housing benefit,

Unless things have changed, housing benefit is only paid if you are unemployed or on a very low wage, it is not paid just because your monthly costs have gone up...