FT- UK housing slump fears overplayed?

ianmr65

I wonder about the ft... normally they are spot on, and informative...

http://www.ft.com/cms/s/0/59a5ee60-12fc-11dd-8d91-0000779fd2ac.html?nclick_check=1

But if you read the article, all they are basically saying is

12% HPC = 3% neg equity

25% HPC = 7% neg equity

Compared to last time when 10% HPC = 7% neg equity

PasturesNew

They must be talking in averages. Where some people have a £20k mortgage and others are overstretched with a 100% mortgage.

I didn't read it, can't be bothered to register

Kez100

Look. Forget last time. It was caused by different circumstances, people didn;t remortgage much, only the wealthy bought to let, and prices were not as overinflated in %, or as high in £.

This time, whatever the % negative equity, given the high £ prices involved, it will be NO JOKE.

I've been there got the T Shirt with 10% negative equity and wanting to move. I felt sorry for us then, but saving was a flippin' walk in the park compared to what people may face this time.

EdInvestor

Only 5% of homeowners have less than 80% equity in their property, so they are right in thinking that negative equity is not likely to be a widespread problem even if there was quite a severe crash.

MrSafeGaz

EdInvestor wrote: »

Only 5% of homeowners have less than 80% equity in their property, so they are right in thinking that negative equity is not likely to be a widespread problem even if there was quite a severe crash.

Thats quite an interesting statistic. Where did you get it from? Linkage please!

merlinthehappypig

EdInvestor wrote: »

Only 5% of homeowners have less than 80% equity in their property, so they are right in thinking that negative equity is not likely to be a widespread problem even if there was quite a severe crash.

So you are saying that 95% of homeowners have a LTV of 20% or less?

EdInvestor

Oops! All but 5% of homeowners have 20% of equity in their properties or more.Source is the BoE.

Basic point remains the same.Strange though it may seem "last time" there were a lot more people with 95-100% mortgages than this time.

Up until the mortgage brokers appeared on the scene (around 2004 IIRC), lenders were still asking for 15% deposits from FTBs. So they are basically going back to that policy now.

Which will probably wipe out most of the brokers - or at least the irresponsible ones.

merlinthehappypig

I think the difference this time will be the amount of unsecured debt people have taken on because of the perceived value of their house.

They might have 20% equity, but that's not a lot of help if they have already spent it on the credit card.

As someone who was a borrower in the last crash it was nothing like as easy to borrow money in the years leading up to it as it has been in the last few years.

pickles110564

merlinthehappypig wrote: »

I think the difference this time will be the amount of unsecured debt people have taken on because of the perceived value of their house.

They might have 20% equity, but that's not a lot of help if they have already spent it on the credit card.

As someone who was a borrower in the last crash it was nothing like as easy to borrow money in the years leading up to it as it has been in the last few years.

We have no unsecured debt, just our main residence mortgage and our BTL mortgages, we have loads of equity in the properties but this does not matter because we have no intention of selling.
When the crash occurs and the time is right we will keep adding to our BTL,s

pickles110564

Kez100 wrote: »

I've been there got the T Shirt with 10% negative equity and wanting to move. I felt sorry for us then, but saving was a flippin' walk in the park compared to what people may face this time.

Never had negative equity, when I bought 1st property had large saved deposit, otherwise building society would not have contemplated giving mortgage.
You could not have done your research and paid too much for your place

Kez100

pickles110564 wrote: »

Never had negative equity, when I bought 1st property had large saved deposit, otherwise building society would not have contemplated giving mortgage.
You could not have done your research and paid too much for your place

What complete patronising rubbish. Didn't do my homework? I can guarantee no one thought prices would tumble more when we bought - they had already fallen 20% and were rallying. We had two good incomes and needed a home. Buying was cheaper than renting - even at 12%. We still had two good incomes when we moved but wanted to be closer to my business so we could have children and I could work part time. We saved ourselves out of negative equity to achieve this.

We then bought at the bottom of the market for a dead cheap price. So now you'll say that was me doing my homework. No, its the luck of timing and the luck of finding a buyer in a market when there were so few buyers moving was difficult.