BOE and a recession.

Aberdeenangarse

mi-key said:

Aberdeenangarse Yes, says 20% 'could' be effected ( by the end of 2024 - and we dont know what is going to happen to rates over the next 14 months ).  80% - or the vast majority are not effected by it. I am really talking about people who will be directly effected over the next 6 months, which will be the critical time.

In any case, we will see what Mr Hunt says today, and if it has any calming effect on things 

It says 20% of households. 34% of homes are owned outright making that figure over 30%

mi-key

Aberdeenangarse as you said before though, it's the affordability. How many of those homes are owned by people who bought quite a while ago a lot cheaper, so don't have massive mortgages on them. How many are owned by people who have been promoted etc... since buying so are now earning more. How many were bought by single people who now have a dual income. How many had kids living at home who have now grown and left, so their outgoings have reduced  How many are owned by people who can comfortably afford an increase in payments, or who even budgeted for it initially.

Yes, people may be 'effected' by a rate rise, but it doesn't mean they are going to lose their homes or really struggle with an increase.

I do feel sorry for those FTBs who have stretched to buy in the past couple of years, they are going to be hardest hit

mi-key

brownbagsFTB said:

The rate changes will affect hundreds of thousands of people over the next couple of years unless the government can stabilise the markets. I think there will be a short term house price crash but certainly not drops of 50% in value. Most experts are saying 10-15% which really won’t affect most people drastically (unless they’re very recent FTB) as house prices have risen by that much in the last 12 months (mine’s gone up £20K after I bought so it really makes no odds if it drops by that). There is still crazy demand for housing. Lots of first time buyers waiting in the wings to snap up properties once they can get loans and I’m pretty sure the government will launch a FTB scheme to help them get on the ladder. Add to that the rental market’s getting a bit screwed as buy to let becomes a lot less affordable for LL and I think we’ll still have enough competition in the housing market to keep prices fairly stable. 

I agree. Even when the stock market crashed prices only dropped by around 15%, and rose back again within 2 years. I can see an initial panic drop of 10 - 15% in some sectors, then slow growth afterwards depending on rates etc.. 

I think some people are panicking because everything has happened so quickly and keeps changing ( and predicting 50% drops ! )  Hopefully things will all settle down a bit over the next couple of months ( partcularly if/when Truss is ousted )

TonyTeacake

Aberdeenangarse said:

mi-key said:

While the UK has a massive shortage of housing, the market will always be held up by that. 

No. Affordability is now the problem i.e. Lenders are restricting loans.

This is right the affordability for most has evaporated, with mortgage rates at 6% and going higher I ask anyone to go online and check the difference on what you can afford by putting 6% in and the difference is huge compared to 2%. 
This means house prices are going to take a huge tumble. 

Let us all not forget the land registry data up to July showed increases in house prices, but most of these deals would have been agreed when interest rates where at 2% at the beginning of the year. Come Christmas time and early next year you will see this in the data and we will see some real drops in house prices.

TonyTeacake

mi-key said:

House prices have risen at a steady rate for the past 13 years, it's not just the last couple of years 

Nobody is denying house prices have gone up in the last 13 years, but in the last 2 years they have gone up crazy amounts. We will see some real drops in house prices come Christmas time and early next year you will see this in the data.

TonyTeacake

mi-key said:

Aberdeenangarse said:

mi-key said:

While the UK has a massive shortage of housing, the market will always be held up by that. 

No. Affordability is now the problem i.e. Lenders are restricting loans.

Lenders only make money when they lend. If it starts hitting their bottom line they will make it easier to buy by some method. At the moment they have had a knee jerk reaction to the interest rate rises and raised mortgage rates by a lot more than they needed to.

Remember only a fairly small percentage of homeowners are on variable rates, or have a short term deal ending soon. Most are on longer fixes, so rate changes don't effect them. 

Around 2 million people on variable rate mortgages in the UK.

Do you consider this a small number? Personally, I don't.

Aberdeenangarse

What people seem to forget is, although House prices ‘only’ dropped 20% in the 1990’s crash, it took 7 years for prices to recover to their previous peak, and that’s not including inflation! We appear to be in another perfect storm. High inflation, high interest rates and crippling energy costs. I doubt mortgage rates will drop below 5% in the next few years. I’m afraid it’s all looking pretty grim. I’d like to be proved wrong.

TonyTeacake

Aberdeenangarse said:

What people seem to forget is, although House prices ‘only’ dropped 20% in the 1990’s crash, it took 7 years for prices to recover to their previous peak, and that’s not including inflation! We appear to be in another perfect storm. High inflation, high interest rates and crippling energy costs. I doubt mortgage rates will drop below 5% in the next few years. I’m afraid it’s all looking pretty grim. I’d like to be proved wrong.

I agree and also the average drop in the early 90s was around 25%, this was not the case for everyone. Some houses dropped by around 50% and people had to give the keys back to the Building Societies. With what is going on around us now I can see this happening again.

Aberdeenangarse

TonyTeacake said:

Aberdeenangarse said:

What people seem to forget is, although House prices ‘only’ dropped 20% in the 1990’s crash, it took 7 years for prices to recover to their previous peak, and that’s not including inflation! We appear to be in another perfect storm. High inflation, high interest rates and crippling energy costs. I doubt mortgage rates will drop below 5% in the next few years. I’m afraid it’s all looking pretty grim. I’d like to be proved wrong.

I agree and also the average drop in the early 90s was around 25%, this was not the case for everyone. Some houses dropped by around 50% and people had to give the keys back to the Building Societies. With what is going on around us now I can see this happening again.

And of course once prices started dropping from 1989 some had to sell. Debt,Divorce and death! This time around we’ve also got over leveraged BTL Investors, who are already in a bit of a pickle! I knew of several who had their home repossessed in the 1990’s I wouldn’t wish it on anyone!

Aberdeenangarse

TonyTeacake said:

mi-key said:

House prices have risen at a steady rate for the past 13 years, it's not just the last couple of years 

Nobody is denying house prices have gone up in the last 13 years, but in the last 2 years they have gone up crazy amounts. We will see some real drops in house prices come Christmas time and early next year you will see this in the data.

My partners has just sold her house for £585,000. A year ago an identical one sold for £475,000 !!!! Nuts