Have viewings slowed or stopped?

tomstickland

Yes, that's your choice. But if you sit it out for 6 months and still no offers then it is a buyer's market.

Rover

Angela,

You must do what you think is best. But I can assure you the media has not precipitated these events - infact, as always, they report via the rear view mirror.
Chart any building stock over the last 18 months, you'll clearly see when all the 'smart' money left the housing bubble.
The great British public are just pawns in the game of money making. The banks and international financiers are the real architects and villians. They have spoken and altered their investments accordingly.

The UK house price bubble or run has bust, it is set in stone.

Re. renting your old house. Fine, but don't expect your 'asset' to increase in its' notional value for many years.
As mentioned, I don't think the correction will bottom until 2011/2. How it then appreciates is the real question?

neverdespairgirl

trulysaintly wrote: »

.BoE hold the trump card in all of this. Lower interest rates encourage borrowing - Melvyn King must have his fingers, toes and kahunas crossed at the moment, because he's got a big decision to make tomorrow....

Given the MASSIVE levels of personal debt in this country, encouraing borrowing seems extremely irresponsible.

neverdespairgirl

trulysaintly wrote: »

Just a question to you though...refresh my memory, what were the levels of Interest Rates in the late eighties/early nineties???

12%? Just a guess from my young mind (I'm 33 by the way).

So, you can't compare then with now.
!

Relative interest rates are very important. If interest rates went up from 10% to 15%, the interest part of the mortgage went up 50%.

If the rate you are paying on your mortgage was 4.5% when you fixed, it doesn't have to go up many numbers to be the same percentage rise now when the fix comes to an end.

poppy10_2

trulysaintly wrote: »

Just a question to you though...refresh my memory, what were the levels of Interest Rates in the late eighties/early nineties???

12%? Just a guess from my young mind

One thing people often forget is that inflation was also much higher back then - inflation was running at 10% in 1989. So paying 12% on your mortgage wasn't so painful when your salary was going up by 10% a year.

Compare that to the current situation, where average mortgage rates are around 7% and yet most salary rises are being capped to official CPI inflation at below 2.5%.

You're right, it is different now. It's a lot worse.

Rover

To put the 'low interest rate' theory to bed. Historically, people may well have been paying 10% on an average house price of <100k, with decent pay rises in the ninties.
Unfortunately, now people are paying ~6% on a very conservative >190k loan, with low pay rises. Furthermore FTB, the life blood of the market, are now being asked to find >10% deposit, plus a an extortionate 'arrangement fee'.

Re BoE interest rates, there has been a de-coupling of mortgage rates from base. Because, the banks - having particpated and generated in this asset bubble - are determined to insulate themselves form the forthcoming correction. Hence <90% LTV, less in most cases, poor rates, arrangement fees, etc. All proof of a falling market, as opposed to the 125%, liar loans, 6times + earnings - criteria of a rising market.

PasturesNew

After the interest rate discussions, I will mention income tax...

Back then, income tax was higher:

In 1979-80 it came DOWN TO 30%. It had been as high as 35% when I first started working.

It was 30% from 1979 to 1986, then:
1986-87 29%
1987-88 27%
1988-96 25%

Also, there was no minimum wage so the poorer people had no limit to how little they earned. And no top up benefits (WTC etc).

I remember clearly going into a Job Centre in 1997/98 and looking at the boards to find a job clearly advertised, without shame at £2/hour. It was a Taxi Controller job working nights.

Before all this crazy lending of 4x, 5x, 6x, 7x, 8x, MakeItUp_x ... when you were limited to 3x things were simpler. You knew if you didn't earn 1/3rd of what you needed to borrow, you could forget it and it was off to private renting for you.

There was no culture of "entitled" or "rights". You simply accepted your lot and got on with it quietly.

(Source: http://www.ifs.org.uk/ff/income.xls)

dubsey

That's a very good point that I had forgotten Rover, when we bought our first home in 1994, yes we had a deposit but there wasn't any kind of arrangement fee which would have made buying the house even harder.

As for banks doing checks on self sert mortgages :rotfl: . Working in accounts I had to deal with ONE phone call out of four employees that had applied for mortgages in the time I was there. That phone call consisted of did he work there, how long for and this is what he told us he earns can you confirm it. They didn't ask for any proof to be sent and he certainly didn't earn what he'd asked me to tell them.

His fixed rate ends in October and I know he's already in deep financial difficulty because of the extensive 'home improvements' he took out an extra loan for, so I will be interested to see how he gets on. He's taken a mortgage he couldn't afford and an extra loan (let alone the credit card companies that used to phone work for him) and I guarantee he will complain that they shouldn't have given him the mortgage in the first place.

borntobefree

Rover wrote: »

90% LTV

90% LTV seems quite generous really when you think that a fall of a third is quite likely - and lets face it a fall of 50% is not impossible.:o

Rover

People sometimes forget elementary maths (and economics ) when talking about house prices - not suggesting you are.

A 50% fall means a wipe out of 100% gains, ie an average general fall to 2000 prices - I doubt that scenario, but as you say not impossible.

Personally believe we could be looking at 30% falls by 2011/2 - as does the IMF.

Also don't forget <90% LTV is available, but don't know how easily. Secondly, arrangement fees of £1k's are now demanded - they are really a further subtraction from the LTV. The cream of the banking industry do have next years bonus' to consider you know!