How can people be so greedy?

bandraoi

Addy1 wrote: »

As far as I understand it, renting is also dead money if rents are higher than mortgage payments, which they are round here.

The way I see it
1) If your rent is less than an interest only mortgage, rent
2) If your rent is between the cost of an interest only mortgage and a repayment mortgage, consider buying, particularly if you're in the area for the long term.
3) If your rent is more than the cost of a repayment mortgage, buy if you're in the area for longer than about two years.

The cost of houses seems to be all about what people are able to pay. For the previous generation, it was a struggle to buy a house, not because of the huge prices, but because of interest rates and bank rules about who they would lend to and how much they would lend.

For our generation the banks are willing to lend large sums at low interest rates so house prices have risen to large sums. This magnifies the differences in income, where previously differences in job security and amount saved for a deposit would have been far more important.

mr.broderick

carolt wrote: »

Still, if there is a crash, FTB's will be in a far, far better position to buy - deposit or not - than those who bought at the peak of the market and are now stuck in negative equity for years. At least FTB's only need to save a deposit, not dig themselves out of a financial black hole too....

And of course, if this scenario does come to pass, to save even 40% of a house that had crashed in price would be much easier to save than say 15% of a far more expensive house.

And it would be paid off farrrrrr more quickly.

(By the way, in previous crashes, eg early 90's, I don't recall 50% deposits being required, do you? Even banks have to make money somehow, and if they are only taking money in on deposit and not lending it out again and getting the interest, they're not going to do very well, are they? So I think 20% deposits are possible, but 50% unlikely.)

Don't forget carol it's different this time

neas

mr.broderick wrote: »

Don't forget carol it's different this time

How will this crash be different? Accelerated?

blue_monkey_2

Interesting. On another thread on this board someone has dropped the price of the house 50k since July last year. The house we let is for sale has just been reduced by 20k......

While it is not a lot now, I think it does say a lot for he way things are going.

A guy my husband works with is paying £1200 a month on an interest only mortgage.... my husbands basic salary is £1250 a month..... this guys girlfriend has just had a baby...... I wonder where they are going to be in a years time???

blue_monkey_2

I think that things will change in that there will not be the offers of 6 times salary being offered for mortgages as there has been in the past, it will go to being 3x like it used to be.

I personally think that the whole senario is a circle of banks/EA and owners.

In this village we have 2 EA, one gives a higher sale price, the other a lower price (sometimes by 90k - my friend house was valued at 250k but expensive one marketed for 339k) - so everyone goes with getting the higher price of course. Or this used to be the case, now you see more boards from the lower rate one. You have to ask WHY people are wanting to sell. Have a read of the threads on this board, how many people are selling up to rent. They want to rent as they are in debt and selling will clear the debts, so they try and sell but they can't, so they knock 20k off, and then again and then end up selling for the minimum they need rather than what the house is 'worth'. And this is when prices will start coming down, people will not pay 200k for a house that sold next door for 150k. And prices will start to downturn. It won't happen overnight, but it will start. Reading the board on here and DFW gives a good indication of where things are going and I really do not think it is up - especially in the South of England and the Home Counties. I don't think we will ever see deposits of 50% being asked for though as the bank is a business the sameas any other, if they are losing money through decreasing prices they are not going to turn business away, are they??