A REAL Mortgage Crisis Coming?

Generali

beingjdc wrote: »

Last summer on daytime TV - she was asked about housepricecrash.co.uk and people who had sold up because they were expecting a crash. She said they made her blood boil, and that if they did the same thing with shares it would be insider trading and there are laws about it for a reason.

She should learn a bit about what constitutes insider trading then because that ain't it. Insider trading is trading using knowledge not available to the market as a whole.

For example, if I was a printer and someone sent their annual report to me for printing prior to release and I saw that the company's profits had doubled and bought some shares before the report was made public, that would be insider dealing. The reason it is a crime is that I have bought shares for £xxx knowing that they should be worth more and in doing have ripped off the seller who doesn't have that knowledge.

If I am an analyst and say, IMO investment XXX PLC is too expensive and I think you should sell, that is not insider trading. If I make up a rumour and spread that rumour to push down the stock price so I can buy more cheaply, that is illegal. If I opine about a company it isn't.

I guess the closest to that in the house market would be going round telling people that xx, Accacia Avenue had subsidence or someone had been killed there when they hadn't in the hope of buying more cheaply. It's not really the same thing as saying, "I say old bean, houses are looking a tad toppy in price right now. I think they may be a little cheaper next year."

Soprano

The problem is a lot of people were sick and tired of being told there's a house crash coming for the past 5 years, that they just no longer believe it boy-who-cried-wolf style.

People have been told their house is worth £Xk, so believe it regardless of what they hear on the media. They are quick to believe their home has gone up in value, but won't accept it has gone down.

Only the deluded think that harsh times are not coming to a lot of people.

ixwood

That's an interesting point and I've heard it from a few people ("people have been saying that for years. As long as we don't want to move, it doesn't matter anyway" etc ) now that you mention it.

So ironically the premature bears actually prolonged the inflated market (and helped send loads of unknowing bulls to forthcoming financial meltdown!).

WTF?_2

kingkano wrote: »

mmm so people always say. But it doesnt look like that to me. Who does it really benefit??

Tradedowners/cashinners - now get less money from their place. Their tradedown will cost less but as we already calculate with tradeuppers before, they will get less money.

Tradeuppers - their property has come down, the one they want has come down, the difference is now less. All fine and dandy. But their deposit etc is all wrapped into their current property. The prices dropping is going to have bitten into that severely. On top of this they now cannot borrow anything like before so cannot afford even the reduced price of their proposed trade-up.

FTBs - probably the most likely to benefit. Except because prices are dropping, banks won't lend much anymore, and you need a big deposit. So they waited because everyone said prices will come down, and saved, but now they still can't borrow enough to get a place, and they needa 25% deposit which means they still need to save.

I think some forgot that a crash or 'lower house prices' would also bring quite a climate change to lending practices and the greater economy overall. But now they are seeing it I guess.

People trading down or cashing in will definitely lose from falling prices. Which is bad news for retirees who had hoped to bank the equity. But should they really have putting all their eggs in the HPI basket?

FTBs or people looking to trade up can do so for less than before. As you say, they may find it harder to borrow but that is a good thing IMO as taking on a huge loan you can't really afford to service isn't the best of ideas.

If you bought your house at a sensible-ish price and did your sums before taking on the mortgage, you'll be OK unless you get hit by adverse financial circumstances that you haven't planned/insured around (eg. loss of income).

The point is that massively rising house prices aren't the boon that everyone seemed to think they were. Falling prices benefit more people than rising prices did and shouldn't affect someone who planned their house purchase properly.

The real problem is the dependency upon borrowing which the economy now has - and much of that borrowing is secured around property or based on a 'feel good factor' that gives people with equity in their house the confidence to borrow. House price crash + recession is a pretty nasty double-whammy.

But blame the government and banks for that - better economic policy could have prevented the bubble from getting out of control and better banking practice would have prevented the credit crunch from happening.

jamescredmond

agree with all of the above.
but not sure some mse'rs will like this post.
my property ( bought '94 @ 47k ) was valued last year at 210k, following some improvements. I was staggered - 210k!!! I'm rich! I'm rich!
it was obvious to the agent that iwas 'out of the loop'.
'how much did you think it was worth?, he asked sniffilly.
'about 150k' I replied.
'tut tut.It's not what you think it's worth. it's what the market says it's worth'.

great. but I only profit if I sell and take up residence in outer mongolia and live out my days as a goat.

stay, and the actual value is meaningless until I take the goat option.

I don't feel rich.I'm not.

I, for one, hope prices fall 30% soon, to inject some reality.

there. I told you some people wouldn't like this..

nelly_2

adr0ck wrote: »

this ia a thread about availability of mortgages

i was pointing out a reasonable mortgage offer thats available on the market at the moment

imo everyone should have a deposit to buy a house (i don't beleive 100% mortgages are sustainable)

by the way nelly you have a wonderful Vocabulary

pointing out vocab grammar spelling on the interpants is, apart from being soo 1990's....... it is the reserve of the self righteous tit... and I am one thousand times funnier and more original than you son

jamescredmond

and since when did 'vocabulary' begin with a capital 'v' away from the start of a sentance???

nelly_2

jamescredmond wrote: »

and since when did 'vocabulary' begin with a capital 'v' away from the start of a sentance???

good point and well spotted ...thats the other thing with morons on the intersocks who think the have acheived something...cos they can spell.... they allways c0ck up themselves

I only point out people failures in jest for fun...

What went wrong in someones life so much that they feel being able to put letters in the correct order is something to look down on others about.

What these morons dont get is there is a world of difference between being able to spell and being able to comunicate.

The fact I have far more thanks than my post count is proff enough I can comunicate what I want to say....and also that all my post smell like a strawberry magic tree car freshener

ManAtHome

jamescredmond wrote: »

and since when did 'vocabulary' begin with a capital 'v' away from the start of a sentance???

He's gone out and bought a new van or something (a Vocabulary 2.8 esi)..?

tawse57

There is a crash coming that will rival the 1929 crash. Bernanke has said that before it is over that banks will go bust and only today said it is already worse than the dot.con crash.

People have yet to get their heads around the credit crunch re loans from banks and other lenders. It is simply going to dry up because most of the banks are seriously screwed themselves and the few that do have sizeable reserves are not prepared to lend it to others. Je Public will only realise this over the coming 12 months when they try and remortgage, when they want a loan for a car or when they are told their credit card is being withdrawed.

As a result of the credit crunch house price falls of 40% to 50% should not be unexpected.