Prices will fall by 50% in four years

chucky

Really2 wrote: »

Surely thats persons repayment were higher when they took out the mortgage.
She is on a .05 tracker that mean she would have been paying what about 5.5% 2 years ago.

the flip side of this which i never understand why people do it - is take out a fixed rate and after the term is finished they get locked into the lenders SVR for a period of time with a redemption penalty if they switch.

maybe they have no option due to lack of lending - in this case it is a 'gamble' not worth taking if you buy property. it could go horribly wrong...

Really2

MissMoneypenny wrote: »

We have only built on a low % of the country.

Mainly due to the fact we need to produce food and a lot of the land is not suitable for development EG hills. etc.

Graham_Devon

We have probably the biggest problem of all to face yet, a long way down the line, thats a given.

Interest only mortgages have yet to rear their ugly heads.

Really2

Graham_Devon wrote: »

Interest only mortgages have yet to rear their ugly heads.

Don't get that graham any mortgage can be IO if the lender lets you (EG have a repayment engine like a ISA)

My offset can only be IO but they obviously see what you are doing in terms of repayment.

If they are on a IO product they would still switch to an IO SVR. They could not force them to go on repayment if they are not offering a product to switch too.

MissMoneypenny

Really2 wrote: »

Mainly due to the fact we need to produce food and a lot of the land is not suitable for development EG hills. etc.

A lot of the growing land was on set aside - the farmers got payments for not using the land to grow food.

The other year they were also getting £500.00 and acre not to grow sugarbeet as there was a glut. We could import sugar cane much cheaper than it cost us to grow sugarbeet and sugar cane is beter that sugarbeet.

chucky

Really2 wrote: »

Don't get that graham any mortgage can be IO if the lender lets you (EG have a repayment engine like a ISA)

My offset can only be IO but they obviously see what you are doing in terms of repayment.

If they are on a IO product they would still switch to an IO SVR. They could not force them to go on repayment if they are not offering a product to switch too.

i'm not sure if this a problem or not. there are quite a few lenders that you could take out a I/O mortgage without a repayment vehicle. you could always cancel the repayment vehicle (ISA/endowment) at any time too

there are a lot of I/O mortgages out there - what we don't know is if equity is being repayed on that loan or not.

the problems are obvious but the scale of the problems is an assumption.

ps. it would be a worse problem to a short-term capital appreciation hungry BTL investor who is stuck with a property that no repayments have been made, is in negative equity and on an I/O mortgage.

Really2

chucky wrote: »

i'm not sure if this a problem or not.

there are a lot of I/O mortgages out there - what we don't know is if equity is being repayed on that loan or not.

the problems are obvious but the scale of the problems is an assumption.

ps. it would be a worse problem to a short-term BTL investor who is stuck with a property that no repayments have been made, is in negative equity and on an I/O mortgage.

I Agree IO is only a majour problem if their as been no capital payment and the loan is higher than the asset.

But in reality at the start of any mortgage their is very little capital repayment anyway.
So again in reality I think it will only be as much as a problem as any other mortgage product as it will be those that have negative equity and default that will cause a loss on the loan.

Really2

MissMoneypenny wrote: »

A lot of the growing land was on set aside - the farmers got payments for not using the land to grow food.

The other year they were also getting £500.00 and acre not to grow sugarbeet as there was a glut. We could import sugar cane much cheaper than it cost us to grow sugarbeet and sugar cane is beter that sugarbeet.

Sorry I would find it madness to build on producing land to make the country more dependant on imported food. Farmer get paid not to produce crops on some land to help rebuild insect life like bees which then help maintain crop yeild for the future etc..

I like the idea we have land to produce food on. If you have no land for food what happens if you lose supply?

Graham_Devon

Really2 wrote: »

I Agree IO is only a majour problem if their as been no capital payment and the loan is higher than the asset.

But in reality at the start of any mortgage their is very little capital repayment anyway.
So again in reality I think it will only be as much as a problem as any other mortgage product as it will be those that have negative equity and default that will cause a loss on the loan.

I did say years down the line....

Wasn't really anything to do with the thread anyway, just felt compelled!

Really2

Graham_Devon wrote: »

I did say years down the line....

Wasn't really anything to do with the thread anyway, just felt compelled!

If it is years down the line it very much depends on the value of houses years down the line.

if they are lower than the loan value, problem. If they are not, not a problem.

But as with most things in life I think it is usually the more financially minded who go IR as there is no point of doing it unless your savings can beat IR rates.

Of course some may have used it to purchase cheap and hope for HPI but thankfully as with eveything else they will not be the majority.